Author: Nila Sweeney of AFR
The proportion of empty rental apartments in the Sydney CBD has dropped to pre-pandemic levels, while other capitals posted record low vacancies, as more landlords sell up to cut their losses while tenants head back into town to take advantage of cheaper rents, Domain data shows.
Vacancy rates in the Sydney CBD fell to 2.9 per cent in May, a level last seen before the pandemic hit in February last year. At its peak, vacancy rates hit 5.8 per cent.
In the Melbourne CBD, the proportion of vacant apartments dropped to 8.6 per cent during the month. While still elevated, the vacancy rate has improved substantially since peaking at 14.6 per cent in October. Vacancies had been declining rapidly since the start of the year.
The biggest drops in rental vacancies and listings were concentrated in the CBD areas and around universities, said Nicola Powell, Domain’s senior research analyst.
“This could be caused by some investors selling up because of the rental market weakness in the CBDs over the past year, or a sign that tenants are returning because of cheaper rents,” she said.
“I think this signals that the worst may be behind for some landlords because we know that those inner city areas have been the centre of weakness for the rental market.”
Vacancy rates have fallen further in the smaller capitals, putting increased pressure on asking rents.
Brisbane, Adelaide and Darwin have posted their lowest vacancy rates on record, on Domain figures, at 1.3 per cent, 0.6 per cent and 0.5 per cent respectively.
Rental markets in Canberra and Perth also tightened significantly, with vacancy rates plummeting to multi-year lows.
Nationally, the vacancy rate slumped for the second month in a row, and now sits at 1.7 per cent, the lowest level since Domain records began in 2017.
Rental listings drop
The number of available rentals across Sydney dropped by 5 per cent over the month, with the inner city, Canada Bay, Auburn, Ryde-Hunters Hill and Bankstown recording the largest fall in estimated vacant rental listings.
In Melbourne, the inner city, Stonnington-West, Glen Eira, Monash and Port Phillip recorded the sharpest decline in rental listings during the same period.
However, with Victoria’s circuit breaker lockdown being extended on Wednesday by another week, vacant rental listings could increase in regions with a high proportion of people working in the hospitality and tourism sectors, Dr Powell said.
“Those who have had a significant reduction in hours may be forced to cut costs and move in with family or friends,” she said.
“Vacancy rates are also likely to remain particularly weak in areas with a higher proportion of short-term rentals as ongoing outbreaks affect interstate travel and sentiment towards travelling to Greater Melbourne.”
Credits to Author: Nila Sweeney of AFR