City rents dip as tenants hit the suburbs

A “two-speed rental market” along Australia’s east coast is set to emerge from the pandemic, says CoreLogic.

Monthly house price data ­released by CoreLogic showed rents in the total Sydney region were down 4.4 per cent for units in Sydney and 1.3 per cent for houses over the month of August. Picture: Kevin Farmer

A “two-speed rental market” along Australia’s east coast is set to emerge from the pandemic as inner-city markets struggle to garner rents found in the suburbs, according to property researcher CoreLogic.

An analysis that looked at the regional drop in rental prices since March and their respective proximity to the Sydney, Melbourne and Brisbane CBDs found the biggest falls were more likely to be centred around the major cities.

Areas within a 10km ring of each of the capital’s CBDs had experienced an average decline in rental prices of 2.3 per cent for houses, while units were down 3.6 per cent.

Outside of the 10km ring and pushing out into suburbia the change was markedly different, with the cost of rent up 0.1 per cent for houses and down 0.4 per cent for units.

Sydney units in the CBD bubble were more likely to record the steepest rental declines, followed by Brisbane, CoreLogic’s head of residential research Eliza Owen said.

“There are several distinct factors of the COVID-19 downturn that have made inner-city rental markets particularly susceptible to a decline in rental values,” Ms Owen said.

“These include the relatively high exposure to overseas ­migration as a source of housing demand.”

A report by the Reserve Bank, released on Thursday, said rents were likely to stay subdued over the coming years, with large ­discounts having an impact on existing rental agreements.

“The pandemic-induced economic downturn has disproportionately affected households with the strongest ties to the rental housing market. Job losses have been much more pronounced for younger workers, who are more likely to rent homes,” the RBA found.

“In addition, policy measures such as the moratorium on rental evictions have encouraged tenants and landlords to renegotiate the terms of their existing leases.”

But some regions are seeing rising rents, particularly in the outskirts areas of the greater capital-city regions.

Of the 125 rental markets analysed by CoreLogic, there were 63 regions where house rents increased, and 35 where unit rents rose over the period from the end of March to August.

Some of these areas included Sydney’s Blue Mountains and Wyong, Melbourne’s Macedon Ranges and Casey region, and Brisbane’s Caboolture hinterland and Beaudesert.

“Anecdotal reports assert that draw cards for outer-city suburbs are relatively cheap rents, and low density along with remote working lessening the hurdle of travel times from areas located further from the largest employment nodes,” Ms Owen said.

Monthly house price data ­released by CoreLogic showed rents in the total Sydney region were down 4.4 per cent for units in Sydney and 1.3 per cent for houses over the month of August.

It was a similar story for Melbourne, down 4.4 per cent for units and 1 per cent for houses. Brisbane remained more stable.

However, Hobart’s rental market took the largest hit of all, with units down 5.1 per cent and houses down 3.1 per cent.