The COVID-19 pandemic has seen a reduction in the demand for property, while an oversupply of properties in Melbourne and Sydney could see cheaper rent, new research reveals.
The latest ANZ CoreLogic Housing Affordability report has shown that inner Melbourne recorded a 57 per cent increase in advertised rental properties while Sydney’s city and inner south both record a 53 per cent jump.
All other capital cities saw a drop in total rental listings.
ANZ economist Felicity Emmett has said the fall in demand for rental properties in inner Melbourne and Sydney was due to their service economies which have been negatively impacted by government shutdowns.
“Nearly 40 per cent of people who work in the accommodation and food services sectors rent,” adding that – between the weeks ending 14 March and 27 June – 21 per cent of hospitality workers lost their jobs, compared to an average of 6 per cent across all industries,” Ms Emmett explained.
The economist also highlighted how changes to overseas migration have seen a drop in demand, as approximately 80 per cent of newly arrived migrants rent their accommodation.
“This drop-off in demand will impact regions popular with migrants, including [inner-city] and south-eastern Melbourne, and inner [south-west] Sydney,” Ms Emmett said.
The oversupply of inner-city properties has reduced rental values by as much as 7 per cent in suburbs such as Haymarket and Barangaroo in Sydney, and Southbank in Melbourne, the affordability report found.
CoreLogic head of research, Eliza Owen, said that while the drop in demand for rental properties would work in favour of tenants seeking rent reductions, landlords should not panic.
“The oversupply of rental stock since March has been largely confined to [inner-city] areas in Melbourne and Sydney, while all other capital cities have experienced a decline,” Ms Owen said.
“There are still opportunities for investors where rental markets have continued to tighten and rental values have increased, including select suburbs across Hobart where Airbnb stock may be reverted back to the short-term rental market as [interstate] travel resumes.” and