Melbourne and Sydney apartment rents fall 2% during COVID-19

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on July 28, 2020
Melbourne and Sydney apartment rents fall 2% during COVID-19

Photo by Gareth Harrison on Unsplash

Asking rents for apartments in the country's two biggest cities have fallen by 2% during COVID-19, new data shows.

CoreLogic's Quarterly Rental Review for June 2020 showed national rents dropped 0.5% in the June quarter, marking the largest quarterly fall in rents since September 2018, with further falls expected in the coming months.

Capital city rents have borne the brunt of of the COVID-19 pandemic's toll on the property market, dropping by 0.7% over the June quarter, compared with a 0.2% rise in regional parts of Australia.

But the biggest asking rent falls were in Hobart which plunged by 2.3%, followed by Sydney (1.3%) and Melbourne (1.0%). 

Asking rents for apartments fared the worst, with rents in Hobart dropping by 3.7%, while Sydney and Melbourne saw falls of 2.1% and 2.0% respectively. 

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.

Lender
Advertised rate Comparison rate* Monthly repayment Rate TypeOffsetRedrawOngoing FeeUpfront FeesLVRLump Sum RepaymentAdditional RepaymentsPre-approval

VariableMore details
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  • For purchase and refinance, min 20% deposit
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VariableMore details
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Owner Occupier Accelerates - Celebrate (LVR < 60%) (Principal and Interest)

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FixedMore details
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Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

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Fixed Home Loan 1 year (Principal and Interest) (LVR < 80%)

  • Make up to $20,000 additional repayments per fixed term
  • Redraw available – lets you access any extra loan repayments you’ve made
  • Choose to rate lock for 90 days (fee applies)
VariableMore details
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Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

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Variable Owner Occupied, Principal and Interest (Refinance Only)(LVR <75%)

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Rates correct as of January 26, 2022. View disclaimer.

Asking rents in Brisbane fell by 0.6% in the June quarter, eroding the increase of 0.6% in the March quarter.

Adelaide and Perth were the only capital cities to see an increase in rents over the June quarter.

Screen Shot 2020-07-28 at 10.44.07 am

Source: Corelogic

CoreLogic's Head of Research Eliza Owen said rents were beginning to rise nationally before the COVID pandemic.

“Prior to the fall in rent values over the June quarter, growth in rents had seen some momentum building, with the national CoreLogic rental index recording consecutive increases between September 2019 and March 2020," Ms Owen said.

"These signs of rebounding rent values came as investor participation in the market was falling from 2017, and subsequently, the rate of new supply additions in rental properties had been falling."

Change in rents:

Region Median rent Quarterly change in rents
Sydney $568 -1.3%
Melbourne $453 -1.0%
Brisbane $439 -0.6%
Adelaide $397 0.1%
Perth $396 0.9%
Hobart $454 -2.3%
Darwin $442 -0.1%
Canberra $566 -0.4%
Combined capitals $466 -0.7%
Combined regionals $390 0.2%
National $441 -0.5%

But the economic impacts of the COVID-19 pandemic has led to significant rent falls in some parts of the country.

"Closed international borders created a significant shock to rental demand, as historically the majority of new migrants to Australia have been renters," Ms Owen said.

"Furthermore, job losses in sectors such as hospitality, tourism and the arts, which ABS payroll data estimates has been around 20%, have also impacted demand, because households in these sectors are more likely to rent than in other industries."

It comes after research from buyer's agency Propertyology found that house rents are predicted to rise in some parts of the country amid undersupply.

At the time, Propertyology Head of Research, Simon Pressley said sharp rent rises would be inevitable.

“Right now, 39 out of 52 Australian towns (75% of the country) currently have an undersupply, nine locations have a balanced market, and the remaining four are oversupplied,” Mr Pressley said.

"As local demand continues to rise, the pressure continues to push rents (and yields) higher.”

See also: Now that it’s a renters market, should you take advantage and find a new rental?

But rents in Melbourne and Sydney are expected to remain under pressure, with high vacancy rates of 3% and 3.8% respectively.

Data from ANZ and Corelogic released last week showed asking rents had plummeted by over 7% in some inner Melbourne and Sydney suburbs since COVID-19 hit.

The number of advertised rental properties skyrocketed by 57% in parts of inner Melbourne, while Sydney's inner city areas saw a 53% spike in rental listings.


Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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