Looking for a rental bargain? Housing data suggests cut-price CBD units won’t last forever, as the market recovers from its COVID-19 slump

Looking for a rental bargain? Housing data suggests cut-price CBD units won’t last forever, as the market recovers from its COVID-19 slump
  • Inner-city unit rental prices collapsed through the pandemic, but are set to recover, housing data suggests.
  • CoreLogic analysis shows capital city rental prices fell 6% from pre-pandemic levels in December, but are now just 0.3% underneath.
  • The lure of cheap rent, plus the reopening of Australia’s international border, may see the deepest discounts evaporate.
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Renters hoping to secure an inner-city bargain have little time to lose, with fresh housing data suggesting metropolitan prices are recovering rapidly from their mid-pandemic slump.

Vacancies across the central business districts of Melbourne and Sydney spiked in the early days of the COVID-19 outbreak, when stay-at-home lockdown conditions encouraged renters to look at larger properties outside of the CBD.

Australia’s international border closure also stopped international students and workers from renting in dense city centres, increasing housing supply.

Thousands of apartments sat empty as workers, students, and tourists fled the CBD, driving rental prices and yields well below pre-pandemic levels.

But in its latest rental report, released Friday, market analysts CoreLogic found inner-city unit rental listings had fallen 55% below pre-COVID levels by October 2021.

Advertised rental vacancies currently sit 68% below January levels, the firm added.

Rental prices are experiencing a similar recovery. In December 2020, capital city unit rental prices had collapsed by more than 6% from March 2020 levels. However, those prices are now just 0.3% below the pre-pandemic watermark.

All told, CoreLogic states Australia is currently experiencing its fastest climb in rental prices in 13 years.

The rock-bottom prices of many inner-city units through lockdowns may eventually entice many renters back into the CBD, Corelogic research director Tim Lawless said.

“Through COVID, renting an inner city apartment has become more affordable in raw dollar terms and in relativity to renting a house,” he said.

CoreLogic figures back up that assertion. While capital city unit rental prices are 0.3% below the pre-pandemic average, a preference for low density housing through the pandemic has resulted in house rental costs surging 10.1% from March 2020 levels.

The impending reopening of Australia’s border, and emerging plans to welcome international students, is also likely to push prices even higher in the coming months.

On Tuesday, Domain chief of economics and research Nicola Powell said this dynamic may see prices “spring back as quickly as they fell.”

As the cost of home ownership falls even further out of reach for the average Australian, inner-city rental prices seem poised to rebound.

Apartments in some of Melbourne’s densest postcodes are still between 13% to 22% cheaper to rent than in March 2020, but those discounts may not last too much longer.