Rents Tumble As Listings Pile Up

22/07/2020 Rents tumble as listings pile up
Property Residential Property investment
Rents tumble as listings pile up
Nila
Nila
NilaSweeney
Sweeney
Sweeney Reporter
Jul 20, 2020 – 5.27pm Save Share
Rents have dived in inner Sydney and Melbourne as a record rental

rental
rentaloversupply,
oversupply,
oversupply, due
to a sharp decline in demand and excess stock, forces landlords to accept lower
returns, the latest ANZ CoreLogic Housing Affordability report shows.
During the past three months, rents in Sydney's inner suburb Haymarket fell 7.2
per cent, the largest decline across Australia. This translated to a loss of around $54
each week or $2800 over the year for landlords.
Rental values dropped sharply in inner Sydney and Melbourne as stock listings surged. Peter Braig
ANZ economist Felicity Emmett said the inner city markets of Sydney and
Melbourne have been the most heavily impacted due to their "service economies",
as people working in industries hardest hit by COVID 19 were also most likely to
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as people working in industries hardest hit by COVID-19 were also most likely to
rent.
"There's been a disproportionate loss of income in the hospitality and tourism

sectors and workers in these industries are more likely to be renting in those inner
city markets," Ms Emmett said.
"At the same time, the border closure meant demand from net overseas migration
has dropped to zero."
Barangaroo also suffered a steep drop with rents falling by 7 per cent between
March and June.
In Sydney's CBD rents slipped 6.9 per cent, while Millers Point and The Rocks
tumbled 6.8 per cent and 6.7 per cent respectively.
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Rents in Melbourne's Southbank tumbled 7 per cent, resulting in a $36.80 weekly

loss for landlords. Rents fell by 6.9 per cent in the CBD and Docklands was lower by
6.9 per cent.
Surging rental stock

Not surprisingly, the areas that suffered the largest drop in rents have also seen a
sharp rise in advertised rental properties.
In Melbourne's inner suburbs, rental stock jumped 57.2 per cent while Sydney’s
city and inner south both racked up a 53 per cent rise.
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Rental listings also piled up in Brisbane city, which added 9.9 per cent new rentals
while Adelaide Central rose by 5.3 per cent.
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The surge in rental listings andAlready

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demandLog have
in resulted in a large number of
untenanted homes since the onset of the pandemic, SQM Research data showed.
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Nila
Nila
NilaSweeney
Sweeney
Sweeney writes on property from our Sydney newsroom. Email Nila at
nila.sweeney@afr.com.au
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In June, more than one in eight rental properties in the Sydney CBD were sitting
empty, while 8.8 per cent were vacant in the Melbourne CBD.
Falling rents a precursor to price falls?

CoreLogic principal Eliza Owen said the weakening rental market could prompt
investors to retreat further.
"Rental yields across Sydney and Melbourne are at record lows, so we're seeing
investors falling out of the market more quickly than owner occupiers," Ms Owen
said.
"But the sharper drop in rents due to a fallout in demand could lead to further
deterioration in investor activity, which could weigh on house prices."
Select Residential Property research director Jeremy Sheppard said a sustained

drop in rents could force some investors to sell up at a loss, which could drag prices
lower.

"Interest rates are low enough for many properties to be cash-flow neutral to hold,
but a significant fall in rent, say 20 per cent, could be enough to put landlords in the
red. We're not there yet," Mr Sheppard said.
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"But if many investors are forced to offload,

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fall in values."
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22/07/2020 Rents tumble as listings pile up

Property Residential Property investment

Rents tumble as listings pile up

Jul 20, 2020 – 5.27pm Save Share

Rents have dived in inner Sydney and Melbourne as a record rental

"There's been a disproportionate loss of income in the hospitality and tourism

Rents in Melbourne's Southbank tumbled 7 per cent, resulting in a $36.80 weekly

Surging rental stock

Save 50% for your ﬁrst 3 months.

The surge in rental listings andAlready

Leading property coverage delivered to your inbox

Save Share License article

Property investment Leasing Property prices Property market

PLEASE CONTACT AGENT FOR SALE AUCTION FOR SALE

180 St Kilda Road ST KILDA VIC 27/118 Crown Street

SAVE 50% NOW

MOST VIEWED IN PROPERTY Already a subscriber? Log in

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Falling rents a precursor to price falls?

Select Residential Property research director Jeremy Sheppard said a sustained

Save 50% for your ﬁrst 3 months.

"But if many investors are forced to ofﬂoad,

The Daily Habit of Successful People

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© Copyright 2020 The Australian Financial Review

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