Rents fall in big smokes as unit demand slumps
THE drop in demand for inner- city apartments rentals in Sydney and Melbourne caused prices to drop by up to 10 per cent last year, while investors in smaller markets benefited from tight availability as prices surged.
Limited overseas migration and the flight to suburbia seen last year caused asking rents for units to drop 10.3 per cent in Sydney and 8.7 per cent in Melbourne over the past 12 months, according to new data from SQM Research.
While house leases fared slightly better in both cities ( down 7.6 per cent and 8.7 per cent respectively), the number of properties available in the Melbourne market ballooned to a vacancy rate of 4.7 per cent – almost double the same time last year.
SQM managing director Louis Christopher said while signs of improvement can be seen in the two larger cities, 2021 will be tough for existing investors. “Demand for inner city property will remain affected by the closure of the international border as well as ongoing caution on future city lockdowns,” he said.
Nationally, house rents rose 9.2 per cent and units were up 6.3 per cent. Vacancy rates shrunk slightly to 2.2 per cent.
Houses in Hobart gained rental momentum ( up 0.5 per cent), unit rents fell 5.1 per cent.
Rental prices in Darwin and Perth surged on the back of tight availability of less than 1 per cent. Darwin was the biggest mover of the year, with investors seeing a 27 per cent rise in rental returns for houses. In Perth, house rents rose by 12 per cent, while units were up 9.3 per cent. Rents climbed in Brisbane ( houses up 0.4 per cent, units 0.6), Adelaide ( houses up 4 per cent, units 1.4) and Canberra ( houses up 0.4 per cent, units 0.6) over 2020.