Return of overseas workers puts pressure on some pockets of rental market

The return of overseas workers has put even more pressure on pockets of the rental market, especially in Sydney and Melbourne, according to new research.

Overseas workers are returning to Australia, tightening the rental market in the capital cities which is offsetting the slight increase in properties available in the outer suburbs.

As a result the residential vacancy rate remained steady at one per cent in July.

The three major capital cities all saw vacancy rates fall in the CBD rental market last month, a likely indication international arrivals are snapping up accommodation, however there are signs the rental market may be easing in regional areas, according to new data from SQM.

Sydney and Melbourne’s July vacancy rates each fell by 0.1 per cent when compared to the June averages, although areas such as Wollongong and the Central Coast saw an increase in vacancies.

SQM managing director, Louis Christopher said while competitiveness remains in the inner city areas the increase in rental vacancies in surrounding suburbs may be a sign the rental market is starting to cool off.

International arrivals and officer workers are moving into the inner city rental market easing pressure on regional renters. Picture: Toby Zerna

“We appear to be recording more evidence of a small easing in rental conditions. If it wasn’t for the falls in rental vacancies in Sydney and Melbourne, the national rental vacancy rate would have recorded a rise for the month of July as there were vacancy increases in most other capital cities and in many regional locations,” he said.

“The rental market by and large remains very tight. And now, with the falls in CBD rental vacancies rates to well below average, we have evidence that the rise in overseas arrivals is starting to put some additional demand pressure in certain pockets of the rental market.”

Asking rents in the capital cities rose by 1.2 per cent over the 30 days to August 12, bumping up the 12-month rise to sit at 17.4 per cent.

Those renting houses in the capital cities have been slightly better off, experiencing a 15.1 per cent increase over the last 12 months, compared to median unit rents growing by 16.2 per cent.

This increase was felt by tenants in most capital cities, with only Hobart, Darwin and Canberra recording rent falls of 1.8 per cent, 0.6 per cent and 0.3 per cent respectively across houses and units.

Mr Christopher said regional tenants can expect further falls in their rents as pandemic tree-changers move back into cities.

“With Covid now increasingly behind us and more employers asking their staff to come back into the office, it is becoming difficult for people to uphold regional living and they are coming back into the cities,” he said.

“There is relief on the horizon for tenants in regional areas, but I can’t say the same for Sydney and Melbourne.”