Hobart has the lowest residential vacancy rate among Australian capital cities at 0.4 per cent in January, while Melbourne and Sydney vacancies fall over the month, the latest SQM Research update shows.
Hobart is experiencing a record low vacancy of rental properties followed by Canberra at 0.9 per cent.
Sydney, on the hand, has experienced some relief in vacancies, with a rate of 2.3 per cent in January. While it has fallen from 2.6 per cent, it was higher than January last year which was 1.9 per cent.
The strong flow of new housing, particularly apartments, in the past five years have finally taken off some pressure on housing shortage in Sydney, SQM Managing Director Louis Christopher said.
"While Sydney's vacancy rate has dropped, it is still well up on levels this time last year. If the vacancy rate holds at this level in coming months, Sydney will be more of a tenant's market in 2018 and rental growth could continue to ease," he said.
Between Sydney and Melbourne, however, Melbourne has a tighter vacancy at 1.8 per cent, not dissimilar to the same time last year.
Overall, vacancy has fallen nationally to 2.3 per cent from 2.5 per cent last month, a regular seasonal condition at the start of the year.
"We've seen falls across all cities, as students prepare for their first semester of study and lease new homes, and workers also secure new rentals, especially in Canberra, which has a transient workforce, and Sydney too. We are seeing very tight rental conditions in Hobart, which is putting strong upward pressure on rents," Mr Christopher said.
Asking rents in all cities rose over the year to January, except for Darwin, Perth and Brisbane.
Corresponding with low vacancies, Hobart and Canberra posted the biggest asking price rises over the year, of between 4.8 per cent and 17.2 per cent.
Sydney's asking rents were flat for houses but rose 3 per cent for units over the year. Melbourne's rents were rising at an equal rate of close to 5 per cent for both houses and units.