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In this episode, I'm sharing five cities that feel almost impossible to rent in. And as history has told us, tight supply can mean huge price growth. But I'm not just talking about high rents. We're also going to focus on areas that have low enough supply that can contribute to massive price growth. I'm Junge Ma, lead research analyst at InvestorKit.
Let's get into the first area. For diversity, I've chosen these five cities across five different states. And the first city we're looking at is Newcastle in New South Wales. Rental vacancy rates in Newcastle has always been lower than 1. 5%.
In the recent years, it's been slightly declining. And now it is sitting at 0. 96%. This low level of rental supply has led to another 6. 3% in rental growth in the past year after the rental boom in 2023 and 2024.
In the sales market, inventory has dropped to 1. 8 months of stock, far lower than our three to four months of a balanced band. The tight supply in the sales market has contributed to a 9. 2% year-on-year growth in Newcastle's median house price. And now let's zoom out a bit.
Over the past 10 years, population in Newcastle has increased by 13%. But at the same time, available stock has decreased by 14%. And what's making it worse is the lower incoming supply level. Over the past decade, building approval rate in Newcastle has been extremely low, around 0. 5%.
Meaning that while population is keeping growing, we're not supplying enough new stock to the market to housing the new residents. Region 2, Maroondah in Greater Melbourne. Rental vacancy rate here is now just 0. 55%. There was a slight increase over 2024, but now it has been declining again.
And this tight rental supply has contributed to 7. 7% rental growth in the past year. In the rental market, supply is also tight. Inventory now is sitting at 1. 7 months of stock.
Again, much lower than the balanced level. And this tight supply level is expected to give Maroondah's property market a strong boost in the coming year on its way of recovery. Now let's zoom out a bit. Over the past decade, Maroondah's population has grown by 7%. It's not really exciting because it's already a very well-established area.
But at the same time, for sale stock or available stock has decreased by 15%. At the same time, we're not seeing enough incoming supply to make things better. Building approval rate over the past 10 years has been gradually declining. And now it is sitting around 0. 5%.
Much lower than our 2-3% balanced level. Area number 3, Onkaparinga in Adelaide. Rental vacancy rate is now 0. 39%. Extremely low level.
And that has led to 7. 4% rental growth in the past year. In the sales market, inventory level has stabilized at around 1 month of stock. Extremely low. And it is not increasing as many outer suburbs in hotspot markets such as Greater Perth.
And because of the tight for sale supply level, in the past year, Onkaparinga's median house price increased by 13%. This is really impressive growth after 4 years of consecutive great performance. Over the past decade, population increased by 9% in Onkaparinga. But at the same time, for sale listings or available stock has declined by 37%. Building approval rate is not extremely low.
It is stabilized at around 1. 5%. A quite healthy level. But based on the dramatic decline in for sale supply, I'd say incoming supply is not catching up with how population or housing demand is growing. Now area number 4, Townsville in Queensland.
It has been a hotspot for investors for 2 or 3 years now. But even with the large number of investment property purchases, the vacancy rate is still sitting at 0. 6%. Lower than 1% and that's definitely a crisis level. And because of this lower rental supply level, rents increased by 9.
1% in the past year. And in the sales market, inventory has been sitting at around 1. 1 months for the past year. And there's no clear sign of improvement yet. Townsville's house prices increased by 23.
3% in the past year. And given the low level of for sale supply, in the coming year, the healthy growth is most likely going to continue. Over the past decade, population has increased by 8%. At the same time, available for sale stock declined by 27%. Over the past 2 years, the fast growth in house prices have triggered a lot of new house development.
And we see the building approval rate has increased from under 1% to the current 1. 7-1. 8%. That's a good sign for addressing this supply shortage issue. But given the high population growth in Townsville right now, the relief in the current rental supply crisis will take some years.
Area number 5, Palmerston in Darwin. Rental vacancy rate now is just 0. 35%. That's 50% down from last year. And this tightening rental supply has led to 5% rental growth in the past year.
And if this low vacancy rate is to continue, we can expect more rental growth in the coming year. And in the sales market, inventory has declined to around 1 month of stock. As a really small market, Palmerston's inventory shrink happened really fast. Just last year, we were still looking at more than 5 months of stock. Then over the second half of 2024, it declined all the way from 5 to almost 1 month.
As a result of the tightening for sale supply, Palmerston's house median price increased by around 7% in the past year. And if the supply level is going to continue to be this low, price growth in the coming year is expected to be much better than the current 7%. As we know, Palmerston is a relatively new area in the greater Darwin region. In the past decade, population has increased by 22%. But at the same time, very interestingly, the for sale number of listings has actually declined by 25%.
That is one of the reasons why even though we are seeing a lot of new houses being built in the past decade, the overall housing supply is still tight. Building approval rates now in Palmerston has increased to 2%, a quite balanced and healthy level. But similar to Townsville, if population is not growing really fast, this 2% building approval rate can over time gradually rebalance supply and demand. But if population keeps growing strongly, people keep coming in because of Palmerston's affordability and better quality of housing, this 2% is likely not enough to relieve the current supply crisis. If you want even more details on these tightly held markets, we've put together a comprehensive guide of over 40 pages, packed with so much more data to help you understand the cities with the tightest supply in Australia.
Find it in the description below and become a better investor and increase your chances of profit. So now you've understand 5 cities around Australia that have the tightest supply constraints. But remember, these indicators are fantastic to follow, but you have to put together the full picture of data before you commit to any area. My name is Junge Ma, Lead Research Analyst at InvestorKit. I'll see you next time.
