- Australia’s rental markets are becoming increasingly expensive again, as vacancy rates fall across the country.
- Perth tenants are now paying 12% more than they were 12 months ago, while Darwin houses cost almost $130 more per week.
- Sydney and Melbourne are the only cities in the country with higher vacancy rates than before the pandemic, with rents still well-below January 2020 prices.
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Almost 12 months after it began, rental markets appears to have largely shaken off the ill-effects of the pandemic for now.
According to property investment house SQM Research, the national vacancy rate is now 2%, below the pre-pandemic level of 2.1%, as capital city markets around the country continue to tighten.
That’s despite the largest two, Melbourne and Sydney, remaining at elevated levels as both continue to bear the brunt of paused immigration and international students inflows. In the Victorian capital, 4.4% of rentals are available, more than twice the 2.1% rate recorded this time last year. The Harbour city meanwhile has a vacancy rate of 3.2%, only slightly higher than January 2020.
“There is more evidence the worse is over for landlords in the Sydney and Melbourne rental markets,” SQM Research managing director Louis Christopher said. “The falls in vacancy rates for the month in those two cities, combined with the increased tightness in other cities and regions, has now brought rental vacancy rates down to below where they were prior to the outbreak of COVID-19.”
It’s been enough to push rents higher in many cities. In Sydney, the falling vacancy rate from its peak has pushed the average house rent up to $663, or 3.2% higher month on month, while units now cost $457 per week, or 2.2% more. Bear in mind, those still represent significant yearly discounts of around $40 per week.
In Melbourne meanwhile, rents were still softening before the latest five-day snap lockdown was called. Renting a house on average costs $513 per week while an apartment will set residents back $376. That’s a 7.3% and 11.2% discount respectively on 2020 prices.
It comes as parts of both cities find it impossible to attract key pre-pandemic demographics.
“CBD rental vacancy rates in both Sydney and Melbourne remain elevated, despite recent falls. And we remain of the view that there will not be a complete reversal of the sharp rise in rental vacancy rates experienced in these locations in earlier 2020,” Christopher said.
“Demand for inner city property will remain affected by the closure of the international border as well as ongoing caution on future city lockdowns. This will mean 2021 will remain largely a tenant’s market in the inner cities but will also very much remain a landlord’s market for regional Australia.”
In Sydney, the CBD vacancy rate has fallen to 5.8%. from a May peak of 14.8%. In Melbourne, an October peak of 9.4% has declined to 7.6%. While a lack of population growth and the continuation of closed borders may leave Sydney and Melbourne rents hamstrung, it’s a different story in other capitals.
Elsewhere, heavily constrained vacancy rates are forcing rents higher. In Perth, rents have soared by around 12% in just 12 months. Tenants in the West Australian city are now paying $50 more per week for a house and around $40 more for a unit.
Houses in Darwin meanwhile are costing tenants 27.5% or almost $130 more than they were this time last year. Nationally, rents are up 10.2% on houses and 4% on units, costing $497 and $386 each on average, and lifted by hot regional markets.
Capital city rents, while still down on pre-pandemic figures, are moving 0.7% higher month on month. Canberra rents are around 5% higher, Adelaide 3%, and Brisbane 1% higher than January last year.
Even if the the economy and the labour force are still in much worse shape.
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