Coronavirus crisis hits rental property market: CoreLogic

Sydney and Melbourne particularly challenged with changed circumstances affecting travel, tourism and students.

The rental rolls on the Gold Coast grew 12.5 per cent over the surveyed period, while the NSW north coast was up 8.6 per cent.

Residential rentals rolls in the inner-city suburbs of Sydney and Melbourne have surged around 35 per cent as the coronavirus crisis reduces demand, according to property researcher CoreLogic,

The combination of rising job losses, a pause in the arrival of international students, and tourism stays being converted to longer-term accommodation has caused the number of rentals properties to climb.

Analysing preliminary data from the week ending 22 March to the week ending 26 April, when lockdown restrictions took effect the economic fallout began to become more visible, the number of rental properties in the usually highly sought after inner-city regions of Melbourne and Sydney have risen by 36.2 per cent and 34.1 per cent respectively.

Sydney’s blue-chip eastern suburbs also experienced a rise in the number of rentals, up 22.8 per cent over the period, while the Adelaide Central and Hills region rose 13.4 per cent.

CoreLogic’s head of residential research, Eliza Owen, said that while the rental market would be harder hit than the selling market, nowhere in the country would see this more than Sydney and Melbourne.

“COVID-19 is having varied impacts on residential property, but arguably the biggest impact could be in the rental space,” Ms Owen said. “But, the impact on different regions will vary, depending on how exposed markets are to tourism, migration and job losses. Several datasets point to Inner Sydney and Melbourne being the most affected.

“This is compounded by a decline in demand. Rising job losses are seeing some tenants negotiate lower rents, or find alternative accommodation, such as choosing to move back with parents. A pause on the flow of international student and migrant numbers could see more properties sitting empty, while domestic students are less inclined to rent close to universities, as they access study remotely.”

Nationally, the number of properties for rent increased 0.8 per cent through the period.

On the Gold Coast, local Ray White boss Andrew Bell said a large portion of the short-stay properties managed by the agency have moved to the long-term rental roll as owners look to render an income as tourism spend is halted.

It is a trend being seen broadly across lifestyle and high tourism areas, with international and state border closures hurting investors.

The rental rolls on the Gold Coast grew 12.5 per cent over the surveyed period, while the NSW north coast was up 8.6 per cent. Popular wine regions, including the Hunter Valley and the Barossa, Yorke and Mid North region, have followed a similar trend, up 3.1 per cent and 2.7 per cent respectively.

Mr Bell said the sudden shift from short-term rental would see the availability of vacation property constrained until at least Christmas, based on standard lease terms of six to 12 months.