A quarter of Sydney and Melbourne properties rented at a discount in May

Photo by Maximillian Conacher on Unsplash

Yesterday Domain reported that in May 2020, 27.7% of Sydney and 25.3% of Melbourne properties were rented at a discount.

This actually represents a percentage fall in the discounted properties rented from April.

In April, that figure was nearly 30% for Sydney and more than 27% in Melbourne. 

However, it should be noted that rental volume was generally much lower in those months, and the news comes after many states introduced various 'no eviction' rules during COVID-19, while short term holiday lets also flooded the long-term market.

See also: Should you find a new place to rent during COVID-19?

As late as February right before the pandemic took off, in Melbourne the rentals offered at a discount were as little as 15.5% of the market, while in Sydney it's remained above a fifth.

Solely going by Domain's research, the toughest capital city to have asked for a discount in May would have been Adelaide - just 12.6% of rental properties were discounted there.

Brisbane and Perth were also fairly tight, at 16.6% and 16.2% discount frequencies respectively.

As for particular areas to fancy asking for a discount, in South and West Hobart in Tasmania more than a third of rental properties were rented at a discount in May - up from just 13.5% in February.

In inner Melbourne that figure was also 32.2%, up from 15.7% in February.

A scan down the list reveals a few 'usual suspect' holiday letting areas - such as the inner city, and 'Gold Coast East' in Queensland at 20.9%, up from 11.8% i.e. Surfers Paradise and surrounds.

Areas and suburbs must have had a minimum of 50 properties rented to qualify.

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How much can I negotiate off rent during COVID-19?

As for how much of a discount renters are getting, SQM Research reported that in the rolling month ending 4 June, in Sydney, houses saw a 1.4% slide in rental prices for a median rent of $643 a week.

For units, that discount was just 0.4%, for a median rent of $478.10.

On the year, these figures represent a 7.0% and 5.1% slide in rental prices respectively.

In Melbourne, for both houses and units the slide over the month was 0.5%, with a 1.4% annual slide for houses, and 4.3% for units, for a median rental price of $532.30 and $405.90 respectively.

Elsewhere - Australia is bigger than Sydney and Melbourne - the discounts weren't as large, if they were discounted at all.

In Brisbane, for example, prices increased over the month - up 0.6% for houses, and 0.4% for units, for a median weekly rental price of $460.70 and $377.80 respectively.

Across all capital cities over the month, rental prices slid just 0.4% for houses and 0.2% for units.

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Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

• The big four banks are: ANZ, CBA, NAB and Westpac
• The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
• The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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