Domain’s Q3 2020 Rental Report has sparked concern for some unit owners, with prices in Australia’s two largest property markets – Sydney and Melbourne – dropping to some of the lowest points seen in recent times.
“Fragmented conditions in the rental market remain evident in the September quarter, with weaker unit rents compared to houses,” said Domain senior research analyst Dr Nicola Powell.
“This is particularly so in inner-city areas, which are more susceptible to changes in overseas migration and international students, tourism and job losses associated with COVID-19.
“Nationally, house rents have regained all of last quarter’s fall. National unit asking rents dropped further over the September quarter. Prices are 4.2 per cent lower than March, equating to a $20 a week reduction. This is the deepest fall over two consecutive quarters and steepest annual fall since the start of Domain’s Rent Report in 2004.”
Sydney
Domain’s research found that unit asking rents dropped further over the September quarter, representing a 4.8 per cent decline since March, or $25 taken from the median weekly asking rent.
“This is the deepest fall over two consecutive quarters since the start of Domain’s Rent Report in 2004. Unit rents have now fallen $55 a week from peak prices in 2017 and are now the lowest in six years,” Dr Powell noted.
“Since March, house and unit asking rents in the city and east region have had the largest decline in Sydney – by $125 and $80 a week, respectively. This is followed by a $70 a week reduction to unit asking rents in the lower north shore. These are the only areas in Sydney to record double-digit percentage falls over this six-month period. Tenants are now paying the same price they were in 2013.”
Melbourne
The Victorian capital has seen the greatest decline in unit rents of all the capital cities – no doubt a result of the stage 4 lockdown. According to the research, unit asking rents dropped another $15 a week over the September quarter.
“Tenants will find asking rents are $30 a week lower than the March peak, before the pandemic. The median weekly asking rent now sits at $400 a week, the lowest in roughly three years. This is the first time Melbourne and Hobart unit rents are the same,” Dr Powell said.
“Units in Melbourne’s inner-ring have had the biggest reduction in asking rents. Since pre-pandemic March, unit asking rents in the inner city, inner east and inner south slipped by $65, $35 and $30 a week, respectively. This marks the deepest fall over two consecutive quarters since the start of Domain’s Rent Report in 2004.”
Brisbane
Upwards towards the sunshine state, house and unit rents are now at record highs, with a strong gain of $15 a week over the September quarter, Domain’s research found.
“House rents are now at $415 and unit rents $395 a week. Brisbane is the fourth most affordable capital city to rent a unit. Brisbane unit rents could overtake Melbourne in the coming months, as Melbourne unit rents tumble pushing the rent price gap to $5 between the two cities – a four-year low,” Dr Powell added.
“Amid the pandemic, the estimated number of vacant rentals has returned to expected levels following a dramatic bounce in April. Brisbane’s vacancy rate is on par with pre-pandemic March, with the volume of empty rentals down marginally compared to this time last year. The reduction in available vacant rentals aligns to the easing of restrictions.”
Full article here
via smartpropertyinvestment.com.au