Sydney apartment market set to boom

Unit sales and price growth have lagged well behind that of houses over the past year but all that is about to change.

OPINION

The return of vaccinated international students to Sydney will greatly impact the apartment market.

It will be a fillip for both landlords and vendors.

The absence of international students has hurt our real estate market since the Federal Government belatedly shut the international borders in March last year.

Their absence had a direct effect on landlords who had hoped to lease apartments to students and often to their families. Sydney saw increased vacancies and lower rents, especially in the inner ring and other tertiary education precincts, despite many other rental markets tightening.

Property prices too, have experienced a boom everywhere but apartment markets which are the typical accommodation for overseas student buyers.

The return of vaccinated international students to Sydney will greatly impact the apartment market. Picture: NCA NewsWire / David Swift

The return of students will also see families buy desired accommodation, so their presence will likely ensure more competition for property listings, both off the plan and established offerings. They will also help the economy as the students take jobs that remain vacant, especially in hospitality and they will also spend.

It is to be hoped the international students do return as a recent update from Asian property portal Juwai noted that universities have enrolled more than 100,000 students who were living overseas and studying remotely.

So none of these offshore students occupy Australian apartments.

“Universities have lost hundreds of millions, but Australian landlords have lost an even larger share of foreign student rental income,” Juwai IQI executive chairman Georg Chmiel noted, adding Melbourne has been hit the hardest followed by Sydney and Brisbane.

“Our best estimate is that Australia will get back to 75 per cent of 2019’s resident international student population in 2022, but that getting back to 100 per cent will take until 2024 or 2025,” he said.

Universities have enrolled more than 100,000 students who were living overseas and studying remotely. Picture: David Swift

Currently three out of five international students hail from countries not considered safe for the early resumption of fully vaccinated travel but these could return via Queensland given the Palaszczuk government’s foresight in building the Wellcamp quarantine facility near Toowoomba.

Mr Chmiel noted that metropolitan suburb profiles had greatly changed during the pandemic.

“Several suburbs that had large student populations before the pandemic have transitioned over the past 18 months,” Mr Chmiel said.

Students may be locked out of the popular inner city and spread across the regions, partly because some investment properties have been sold to owner occupiers, and partly because the rental mix has adjusted.

Before the pandemic, about 250,000 international students were studying in NSW, with some 57,000 currently trying to get into NSW.

The NSW international student arrivals plan will allow a limited number of 250 international students studying with NSW education providers to return each fortnight from early December.

HOLIDAY-MAKERS, TOURISM INDUSTRY BRACE FOR FRESH PAIN

Some holiday home owners in regional NSW might have had a sleepless night after being absent for the past four or so months.

They potentially arrived, or were woken in the cool of the night, to find their smoke alarm incessantly beeping given the battery had neared the end of its life during the extended regional lockout.

But that’s not the only pressing issue for holiday home landlords.

There was an ill-timed November 1 deadline for all short term and holiday rental properties to register with the state government’s registration scheme.

The tourism industry could take another hit due to ill thought out new laws on short term rentals

Thousands of non-registered short-term rentals are now being suspended from major accommodation platforms, like Airbnb and Stayz, just as regional tourism revenue resumes.

The timing was a dopey decision by state government minister Rob Stokes, that will see landlords lose the prospect of fresh bookings in what has been an ailing $30 billion industry, impacted by bush fire and Covid hits to revenue.

Two weeks before the November 1 deadline there were 12,000 holiday home registrations with the NSW government which had jumped to 26,000 by last Monday – still well short of the estimated 80,000 short-term rental properties across Sydney and the regions.

There is always doubt on total holiday home and short term accommodation numbers. Especially now as after the regional property boom, plus lockdown, many rentals may have quit the rental pool, being used permanently by their owners, or sold to owner occupiers departing Sydney for good.

The timing was a dopey decision by state government minister Rob Stokes. Picture: NCA NewsWire / Gaye Gerard

The new rules for short-term rental accommodation (STRA) providers require all NSW holiday homeowners to register their property before it is rented.

They must pay a $65 fee via the NSW Planning Portal, and once they have completed registration, owners will be issued with an STRA Property ID number, which must be displayed on online property listing websites.

The new rules follow a 2019 discussion paper, stemming from a parliamentary inquiry into the Adequacy of the Regulation of Short-term Holiday Letting in NSW.

It came about in part from concerns over inconsiderate or anti-social behaviour of guests, which now sees an exclusion register kept by Fair Trading with a “two strikes and you’re out” policy with any landlord or occupant breaching noise rules being banned.

The new register features a ‘two strikes and you’re out policy for unruly guests.

The state government has taken the review to regulate the previously unregulated industry. The new system will see the introduction in some local government areas, including Ballina, Dubbo and Bega Valley, of 180 nightly maximum stays with the register set to capture the number of days a property is used, allowing for monitoring of any such rental limits.

All registered rental homes have until 1 March next year to meet fire safety requirements, including evacuation diagrams, fire alarms, fire blankets in kitchens, extinguishers, evacuation area, and emergency contacts.

Holiday homes must also have a Covid-safe plan in place.

Jonathan Chancellor owns a half-share in a holiday home.