The recent press heralding Melbourne as the cheapest city in Australia to rent comes as no surprise given it also holds the record as the most locked down city in the world through Covid. The travel bans coupled with prolonged restrictions over 18 months has discouraged or prohibited people from coming to Melbourne and prompted many to leave town.
The good news however is the end of lockdowns and travel restrictions in Melbourne is nigh, and so too is the end of falling rents and extended vacancies.
The AFR reported yesterday that the “Worst is over for Melbourne and Sydney apartment landlords” stating that while Melbourne CBD apartment rents have dropped by as much as 32.7%, the sector is poised for a strong recovery as tenants return to the city and the international boarder reopens, based on analysis by Domain.
Domain chief of research and economics Dr. Nicola Powell said rents in Melbourne rose by 3.2% in Q3 2021 and apartment rents had risen faster than houses during that same period. This shows that the worst is over and people recognise the affordability of inner city apartments.
Anecdotally we saw rents fall significantly in Melbourne in 2020 following implementation of the travel bans, but rents mostly held steady through 2021 despite ongoing lockdowns. This indicates it is the travel restrictions that are to blame for the fall in rents, and as travel opens up, apartment rents and capital values will recover as well.