According to a recent report released by leading property research house SQM Research, the national residential vacancy rate has recorded a substantial increase this year from 2% in March to 2.6% in April [1].
The year on year comparison also revealed rises when the national rental vacancy rate in April 2019 was 2.3% compared to 2.6% for April 2020, indicating the surge in vacancy rates is beyond seasonal rises. Only Perth and Darwin recorded lower vacancy rates compared to this time last year.
Over the month, capital city asking rents decreased 1.3% for houses and remained stable for units for the week ending 12th May 2020, to record asking rents of $537 per week for houses and $428 per week for units. National combined rents are now recording a 12-month decrease of 3.1%.
Interestingly, CBD’s and Holiday locations appear to have borne the brunt of the declines’ showing the largest increases in vacancies over the period.
Data obtained from CoreLogic shows a high correlation between employment in sectors that have been adversely impacted by COVID-19 shutdowns and the estimated portion of dwellings that are rentals [2].
On perusal of the data, the common link is likely attributed to the loss of employment associated with the COVID-19 pandemic as well as the decline in overseas visitors to these localities.
Where To From Here?
The only certainty at this point is more uncertainty. It remains to be seen how long the isolation measure will remain in place, however, with the recent announcement from the Australian Government regarding the roadmap out of COVID-19 and the re-opening of the economy, there appears to be light at the end of the tunnel.
For now, the lockdown will continue to place downward pressure on asking rents and rental yields. Subsequently, building approvals will likely slow until conditions improve.
To stay up-to-date as the COVID-19 pandemic plays out to make sure you join our Weekly Property Market Pulse Newsletter here.
Bradley Wearne - General Manager & Head of Research at Meridian Australia
P: (02) 9939 3249
References
[1] SQM Research - National Vacancy Rate Report
[2] CoreLogic
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