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Inner city rental prices driven down as COVID-19 shuts borders

Published: (Updated: ) in Australian News by .

Those most in the firing line include the inner-city markets of Melbourne and Sydney.

International COVID-19 border restrictions are driving down the rental prices of properties in Australia's inner-city markets, new research has revealed.

Analysis by property research firm CoreLogic shows that the closer a renting region is to the CBD, the more likely landlords are under pressure to drop prices.

Those most in the firing line include the inner-city markets of Melbourne and Sydney, who also boast the highest average flux of overseas migration.

READ MORE: Melbourne's median property price plummets by $30,000 during COVID-19

"The onset of COVID-19 may be creating a two-speed rental market, with inner-city rents declining faster than those in the outer suburbs," Eliza Owen, Head of Research at CoreLogic said.

"CoreLogic data confirms that there is a positive correlation between changes in rent values and distance to the CBD.

"This means that the closer a region is to the CBD, the more likely it is that rent values have fallen."

READ MORE: More than 1.5 million Aussie households now in mortgage stress as economy shrinks

Data from the June Quarter shows that on average, median capital city rental prices dropped by 0.7 per cent, with most of those falls concentrated in an around Sydney and Melbourne.

Sydney remained the most expensive rental market in the country with a median weekly asking price of $568, closely followed by Canberra with $566 a week.

Hobart came in third with an asking price of $454 a week, followed by Melbourne ($453), Darwin ($442), Brisbane ($439), Adelaide ($397) and Perth ($396).

READ MORE: Property investors spy regional house price boom during COVID-19

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When broken down by individual suburbs, the picture becomes clear: rents in inner Melbourne dropped 9.6 per cent from $553 to $500; Sydney's eastern suburbs dropped 10 per cent from $812 a week to $731 and Sydney's inner south dropped a whopping 10.5 per cent from $731 to $654.

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

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

READ MORE: Australia's 10 postcodes most at risk of rental unit oversupply, report claims

Aussie suburbs now at risk of rental oversupply

A recent report from RiskWise Property Research detailed what it claimed are Australia's 10 postcodes most at risk of new units flooding an already weakened rental market.

New South Wales dominated the list, with four neighbourhoods in the top 10.

Victoria and Queensland each had two postcodes listed, while Adelaide and Darwin were also flagged.

Gosford, on the NSW Central Coast, rounded out a NSW grouping which included Sydney suburbs Parramatta, Rouse Hill and Mascot.

The 10 postcodes most at risk of unit oversupply (not ranked in order):

VIC 3000 Melbourne

VIC 3008 Docklands

NSW 2020 Mascot

NSW 2155 Rouse Hill

NSW 2150 Parramatta

NSW 2250 Gosford

NT 800 Darwin

QLD 4101 West End

QLD 4217 Surfers Paradise

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SA 5000 Adelaide

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The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

Source: 9News https://www.9news.com.au/national/coronavirus-australia-inner-city-rental-prices-plunge-covid19-stops-international-arrivals/c40271fa-3542-4e5b-83c8-7e4aa8436374

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