A two-speed residential rental economy has emerged post-COVID-19 with apartment owners in the eastern mainland states the biggest losers as a growing number of tenants opt for the space and security of houses.
New data from MRI Software, which tracks real-time rental performance across 4000 real estate offices, reveals the average national house rent has risen through the pandemic to $526 – 4 per cent more than in late 2019.
The reverse is true for apartment rents, which fell 7 per cent on a national basis over the same period due to border closures, few domestic tourists, a lack of business travel, no foreign students and stock oversupply in certain CBDs.
Josh Symons, Residential Industry Principal at MRI, said the increased number of people working from home has also had a major impact.
“Many people have been looking to get more space so they have that work-life balance even while working from home,” Mr Symons said.
“I think another critical point is that expats have returned, moved back into their houses and pushed those tenants out into the market.
“Because you have got this inflection point of people wanting more space, demand has been rising while supply has been decreasing.”
He added that not only have apartments fallen, but it also takes longer to rent an apartment than a house.
In December 2019 the average time between apartment tenancies was four weeks, but it is now more than six weeks. This metric has remained stable for houses at five weeks.
Apartment owners in Melbourne, Sydney and Brisbane have been hardest hit.
Melbourne’s apartment rents have steadily declined in the past 18 months, falling 17 per cent from an average of $493 pre-COVID-19 to $412 in early June.
Apartment rents fell by 8 per cent in Sydney and 4 per cent in Brisbane.
In all other capital cities, apartment rent grew over the past 18 months. The strongest increases were in Perth and Hobart, both up by 8 per cent, while Adelaide apartment rents edged ahead by 2 per cent, the same as the Gold Coast.
House rents increased in all markets except Melbourne, where they dropped 4 per cent to $455, making it one of Australia’s lowest-cost rental markets.
The Perth market played catch-up as demand caught up with supply and the city had the biggest rental increase of 8 per cent for house rents, which reached an average of $451.
That is still the second-lowest capital city rent, but in a sign that increases will continue in Perth, the average rent on new leases in the metro area is now at $516.
Adelaide remains Australia’s cheapest housing rental market despite a 5 per cent increase in rents to an average of $416.
Hobart house rents rose 2 per cent to $507, significantly slower than unit growth in the city.
Already high rents on Gold Coast houses increased a further 1 per cent to reach $665, much more than in near-neighbour Brisbane, where the average rent grew 2 per cent to reach $483.
The cost of renting a Sydney house was up 2 per cent over the past 18 months, with the average rental rate at a national high of $729.
Article Source: www.afr.com
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