The Agency Quarterly Rental Report shows an expected drop in rental values and yields, according to Maria Carlino, National Head of Property Management.
The June Quarterly Report released by The Agency gives a comprehensive snapshot of the rental market as it stands and there have been some interesting discoveries, according to Maria Carlino, National Head of Property Management.
"Surprisingly vacancies haven’t hit the roof as first expected and the reports reflects the activity of our rental enquiries," said Ms Carlino to WILLIAMS MEDIA.
"Not surprising is the drop in rental values and yields, showing supply is outstripping the demand.
"Unfortunately, today’s rental market has to compete with the COVID rent relief plans, tenants reassessing their environments and financial means.
"We as an industry can no longer rely on traditional means to lease properties, it’s all about innovation and being better connected to prospective tenants, this will determine how successful you are."
Ms Carlino said the exception was obviously Victoria, where due to the second wave of Coronavirus, the market is in complete lockdown.
Source: SQM Research
Figures from SQM Research were used to highlight the changes in the quarterly rental period where nation-wide the vacancy rate stands at 2.2 per cent, down from the same time last year, 2.3 per cent and down from the previous month, 2.5 per cent.
"We believe the surprise fall in vacancy rates is due to Airbnb property owners giving up on the longer term leasing market and moving back to short term leasing, especially in light of the July school holiday period and the opening of some state borders," said Louis Christopher of SQM Research.
"The fall in rents over the same period for a numbers of our capital cities suggests that the weakness in the rental market remains.
"Going forward, our expectation is the Australian rental market will remain weak for the duration of 2020 or until such time as the international border reopens and we as a community have past the worst of COVID19."
Ms Carlino agreed, saying potential tenants will continue to view available rental properties.
"Housing is a priority and that won’t change. What has changed is the number overseas tenants, tenants moving for work from state to state, tenants moving back home, this slice of the market has dramatically decreased," Ms Carlino told WILLIAMS MEDIA.
"The COVID tenant is now the seeker and negotiator for more affordable living arrangements and homes, this will continue till the end of the year and more than likely stretch into early 2021.
"The coming 6 – 9 months we will be in a stagnant market for rental returns but leasing activity will retain constant."
Source: CoreLogic
According to CoreLogic the decline in rent values over the quarter has come at a time when the rental market was already relatively weak.
Annualised growth in national rent values was just 1.1 per cent in the five years to June 2020, compared with annualised growth in the selected living cost index of 1.4 per cent in the 5 years to March for employee households.
In other words, rents have generally seen softer growth than the growth in general cost of living for most households.
Ms Carlino said she had high hopes for the next quarter.
"For the next quarter I would like to see more stability in employment, borders open, Melbourne out of lockdown and the country back on its feet to the recovery for a stronger beneficial start for 2021," said Ms Carlino.
Breakdown of capital cities
Sydney
At a Glance:
Melbourne
Source: SQM Research
At a Glance:
Brisbane
Source: SQM Research
At a Glance:
Perth
Source: SQM Research
At a Glance:
Adelaide
Source: SQM Research
At a Glance:
Canberra
Source: SQM Research
At a Glance:
Darwin
Source: SQM Research
At a Glance:
Hobart
Source: SQM Research
At a Glance:
Regional areas
Mr Christopher highlights the unprecedented and sudden shift towards regional living.
"No doubt this has been triggered by Coronavirus and the discovery that working remotely is now very achievable for many businesses, especially ‘white collar’ services," said Mr Christopher.
"I suspect there will be some reversal back, but I also suspect the shift is in part, permanent.
"For starters there is the relative affordability factor of living away from the very costly city living.
"Rents are cheaper and traffic is minimal."
Sunshine Coast
Source: SQM Research
The rental vacancy rate for June was 1.2 per cent, a decrease up from 1.8 per cent in May
Gold Coast
Source: SQM Research
The rental vacancy rate in the main area of the Gold Coast for June was 4 per cent, a decrease from 5 per cent in May, according to SQM Research
Newcastle
The rental vacancy rate in the Hunter region for June was 1.1 per cent, a decrease from 1.5 per cent in May, according to SQM Research.
Source: SQM Research
Wollongong
Source: SQM Research
The rental vacancy rate for June was 1.4 per cent, a decrease from 1.8 per cent in May, according to SQM Research.
Central Coast, NSW
Source: SQM Research
The rental vacancy rate was 1.2 per cent for June, down from 1.6 per cent for May, according to SQM Research. The implied gross yield was stable June 2020 sitting at 3 per cent.
To download The Agency Quarterly Rental Report click here.
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