Melbourne city vacancies have hit an all-time high, as property prices dive nationwide

Melbourne vacancies have hit a record high. (Chris Putnam, Barcroft Media via Getty Images)
  • There are now more than 20,800 vacancies across Melbourne, with a record one in ten CBD properties sitting empty, according to SQM Research.
  • As stage four restrctions continue in parts of Victoria, the state capital has diverged from other cities which all saw vacancy rates decline in August
  • With Sydney’s vacancy rate still higher however, its rents have seen the greatest falls, plummeting around 8% over the last 12 months.
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One in 10 properties in Melbourne’s CBD is sitting empty as the stage four lockdown continues on.

The new figures from SQM Research show the record high came in August, after the pandemic inspired a ‘mass exodus’ earlier this year.

Across the entire city, there are now more than 20,800 empty dwellings — almost double the number recorded 12 months ago — bringing Melbourne’s overall vacancy rate to 3.4%.

It’s the latest sign of a major divergence that has opened up between it and every other capital cities.

While Sydney has around 5,000 more vacancies and a slightly higher vacancy rate to boot, it’s slowly beginning to simmer down after a spike in July.

Likewise, there wasn’t a capital that ended August in a worse position than it started, with Perth, Canberra and Darwin all making the most headway in filling vacant properties.

SQM Research managing director Louis Christopher said tenants were now enjoying being in the driver’s seat in a changing property market.

“The shift towards regional living continues at pace, largely at the expense of higher inner-city rental vacancy rates [although] I suspect there will have to be a high point in this move soon,” Christopher said.

“Meanwhile Sydney and Melbourne rents continue to fall providing leasing opportunities for tenants who have chosen to stay in town.”

Indeed, SQM data shows Sydney rents have fallen by an average of 8% in the last 12 months, while Melbourne apartments fell by 6%.

Over the same period, rents have risen rapidly in Perth, Canberra and Adelaide, along with national rents propped up partially by stronger regional markets.

Property prices keep falling

It’s unsurprising then that as the investment case for property declines in Sydney and Melbourne, so follows prices.

Separate figures from the ABS on Tuesday confirmed that both capitals, the largest and most property markets in the country, have led price falls, dropping 2.3% in Sydney and 2.2% in Melbourne over the June quarter.

In fact, with the lone exception of Canberra growing by 0.8%, every capital city market appears to have softened. Darwin prices dropped by 1.4%, Adelaide by 1%, and Brisbane 0.9%.

It saw $98.2 billion wiped from Australia’s $7.1 trillion combined property market. While lending figures show first home buyers have jumped into the market, investors have been relegated to the sidelines.