Rents are rising across Australia as vacancy rates continue to fall to unprecedented lows. SQM Research reports that the national vacancy rate fell to 1.8% in May, compared with 2.5% a year ago.

SQM managing director Louis Christopher says: “Vacancy rates continue to fall Australia-wide, which is forcing up in rents, particularly in regional locations.”

The report notes that vacancy rates have dropped in Sydney and Melbourne, with Sydney now at 2.9%, down from 4% a year ago. Melbourne is now the only capital city above 3%. The other six capitals are all below 1.5%.

“This trend of falling vacancies and higher rents is likely to remain through the second half of the year, given the fierce competition for rental accommodation in many areas,” he says.

REIA president Adrian Kelly says the median rent for 3-bedroom houses increased in all capital cities over the March Quarter. Darwin had the highest annual growth at 17%.