While property values showed resilience through the difficult Covid19 induced property cocoon of 2020, the rental markets in certain parts of Australia were hit quite hard.
And while prolonging vacancies and falling rentals have concerned some investors, others have fared quite well as it has really been a tale of two rental markets around Australia.
On the one hand house rentals have remained firm and in fact increased significantly in some cities that were largely unaffected by COVID-19, while on the other hand apartment rentals have slums, particularly in the Melbourne and Sydney CBD’s.
The latest Domain Rent Report shows that houses rents are now at a record high with the steepest annual national gain in just over a decade, while national unit rents posted the sharpest fall on record to reach their lowest point since early 2014.
“The disruption will certainly continue too in the short term.
When the rent moratoriums stop in the various states in March this year, we’re likely to see rents rise again and tenants either paying higher rents or being forced to move to lower priced accommodation” said Domain senior research analyst Nicola Powell of the December quarter report.
Sydney unit rents have recorded their steepest drop in more than 15 years, new data shows, giving tenants in some pockets the chance to negotiate hundreds of dollars off asking prices.
In the Sydney CBD where renters are spoilt for choice, some landlords have slashed prices by up to 35 per cent to secure a tenant
Existing tenants also continue to negotiate discounts on their rent, particularly for apartments in the city and eastern suburbs, an area where median unit rents are down $100 in 12 months.
But Sydney is now a two-speed market for tenants, with house rents returning to record highs over the quarter, jumping $10, or 1.9 per cent, to $550 a week.
Melbourne apartment rents have fallen to their lowest point in four years and recorded their steepest annual fall on record in 2020, according to the latest Domain Rent Report,
The median asking price for Melbourne units dropped by $12 a week to $388 in the December quarter, following steep falls in September and June.
Melbourne is now the third most affordable capital city to rent a unit, after Adelaide and Perth. It is cheaper to rent an apartment in Melbourne than in Hobart, Brisbane and Darwin, and pricey Sydney and Canberra.
Domain senior research analyst Nicola Powell said the drop in median unit rents had been driven by steep falls in Melbourne’s inner-city apartment market, where vacancy rates spiked during the lockdown.
But a two-speed market emerged, with inner-city apartments the hardest hit amid Melbourne’s extended lockdown, while house rents are rising in the south-eastern suburbs and Mornington Peninsula as tenants search for more space.
Unprecedented rates of interstate and overseas migration have sparked one of Brisbane’s strongest rental markets in a decade, with the city clocking record-high median prices that, in parts, are outstripping Melbourne.
Rental prices for houses rose by $10 to $425 a week during the December quarter, with units following close behind at $400 per week – up from $395 three months earlier, according to the Domain Rent Report.
Brisbane gained the most interstate residents than any other capital over the June quarter … the lure of the city is real – from the lifestyle and the climate to the containment of the virus,” Dr Powell said.
“Across Brisbane, median rents are up by $15 a week compared to December 2019, with the vacancy rates down by one percentage point over the past 12 months to a tight 1.9 per cent.”
Adelaide Rental Market
Adelaide has proved to be one of Australia’s strongest markets in both houses and units, with house rents increasing $5 over the December quarter to $410 a week, and unit rents the same over that period at $340.
However, it’s still the cheapest capital city in which to rent both a house and an apartment.
“Parts of Adelaide are doing very well, but the CBD market still has a higher vacancy rate, like other capital city’s CBDs,” said Dr Powell. The vacancy rate sits at 0.7 per cent.
Perth Rental Market
Traditionally, many people from Perth would migrate to other capitals but the pandemic has dampened that movement considerably.
And a big proportion of FIFO workers travelling to the Western Australian capital have, over the past year, settled in Perth instead with their families.
“So, those changes have both increased the demand for rental properties,” said Dr Powell.
“At the same time, real estate agents are reporting that some landlords are holding off from listing their properties until after the rent moratorium so they can put up the price, which further depletes supply.”
As a result, both house and unit rents have risen considerably, hitting the highest asking rents the city has seen in five years, with the strongest annual growth of all the capitals and a vacancy rate of 0.9 per cent.
Canberra Rental Market
The nation’s capital remains the most expensive capital in which to rent a house at $600 and now, for the first time in a decade, it’s also the most pricey place to rent a unit at $495 a week.
Many government employees living and working in Canberra were relatively unaffected by the economic disruption of COVID-19. “Over the last quarter house rents went up $20 and units $15,” Dr Powell said.
Hobart Rental Market
Hobart is the only capital city to record lower house rents compared to pre-pandemic March and is the third hardest hit unit rental market, behind Sydney and Melbourne according to the Domain report.
House rents have risen 35 per cent over the past five years while unit rents surged 43 per cent, the steepest rent growth across all capital cities during this period.
Rents are likely to rise further as Hobart’s vacancy rate dips below pre-pandemic March according to Dr Powell.
Darwin Rental Market
Darwin house and unit asking rents reached the highest since 2017.
Darwin had the second strongest house rent growth over the year of any capital city, with rents rising $52 to $550, and the third biggest unit rent rise at $30 to $420 a week.
“Similarly to Perth, people tend to move away interstate for work opportunities, but the pandemic put a stop to that,” said Dr Powell. “They weren’t so disrupted by the virus either, so weren’t so keen to move.”
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