While house prices remained resilient through pandemic inflicted 2020, Australia’s rental markets suffered.
Commencing in March 2020 vacancies started rising causing asking rents to declined.
According to the REA Property Outlook Report the main driver of this was high levels of job loss in hospitality, tourism, and education.
If you think about it, the majority of renters are young and high proportions were employed in these sectors.
Income loss affected their ability to afford rent and was one of the reasons behind the six-month moratorium on evictions that was legislated by the Federal Government.
Another challenge for the rental market was problems in the tertiary education sector since foreign students were unable to return to Australia and many local students returned home or moved into share accommodation as classes moved online.
Rental markets returning to normal
REA reports that by the end of 2020, our rental markets appear to have largely normalised but there were only two areas where rents were down over the 12-month period.
Not surprisingly, given high levels of unit development over recent years, plus higher exposure to student markets, Melbourne and Sydney unit markets saw the biggest drop in rental prices.
More positively, not everywhere was hit by poor levels of rental demand.
Regional Australia did particularly well, whether led by growth in the mining sector, or alternatively, people looking for more space and taking advantage of change
For houses, regional NSW saw the biggest jump in rents, increasing by 5 per cent.
For units, strong mining conditions pushed up rents 6.7 per cent in regional WA.
REA forecast that while a rental market recovery is imminent, the rebound for inner Melbourne will be slow.
Melbourne has seen the biggest increase in rental listings on realestate.com.au since the start of the pandemic.
In fact, Victoria accounts for almost 85 per cent of the increase in vacant units since the start of the pandemic, highlighting the effect the prolonged lockdowns had on tenant demand.
Melbourne CBD saw an additional 4,341 units vacant year-on-year in December 2020, far more than any other location in Australia.
Now is the time to take advantage of the opportunities the current property markets are offering.
Sure the markets are moving on, but not all properties are going to increase in value. Now, more than ever, correct property selection will be critical.
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