Why it’s a renters’ market in Australia’s two biggest cities

It’s been well documented that the Coronavirus crisis has caused a disturbance in the property market, and nowhere is that clearer than in rental properties in the two biggest cities in Australia. 

New data from property information and analytics provider CoreLogic shows the percentage of rental housing advertised as being available in Sydney and Melbourne rose during May. 

In Sydney, 4.3% of the total rental stock was advertised in April, which increased to 4.5% in May. In Melbourne, the jump was even higher, moving from 3.2% of total rental stock advertised to 3.6% – a jump of more than 3000 properties to 27,000 available across the city. Both these increases are much higher than in the rest of the country, where some places have even seen a decrease in rental stock advertised. 

This drop in occupation can be attributed in part to the complete slowdown of immigration, which Sydney and Melbourne see the majority of. Most people who come to Australia from overseas will rent when they first arrive, so any housing that would have been expected to be occupied by those immigrants is not being filled.  

In the same vein, there has been a close to 100% year on year drop of foreign student numbers in the two cities that usually host more than 290,000 international students (more than 70% of the country’s total). Alongside domestic students largely studying from home, that has depleted demand for rental properties for students around the many tertiary institutions in Sydney and Melbourne.

On top of this, domestic renters are moving in with partners or back with parents in an effort to save money in a tough economic environment, further reducing the number of rental properties with tenants.

Because of the typically high demand for rental properties in these cities, the last few years have seen a boom in unit construction, which means that the sudden drop in demand has been more keenly felt. Data suggests that as many as 54,000 new apartments were built in Sydney during 2018 and 2019, with many of them sitting empty even before the crisis. 

Finally, thanks to international and interstate travel bans, many short term accommodations, particularly units and houses rented out through Airbnb, have entered the market as long term rental accommodation, pushing up supply even further in a low-demand market. 

As a result, renters are finding the market tipped in their favour, with a lowering of rental prices across large swathes of both cities. If you’re looking to find a bargain, these are the suburbs in Sydney and Melbourne where rents have fallen the most over the past 12 months:

Sydney, houses

Suburb Median price YoY % drop

Airds $350 -24%

Strathfield South $550 -17%

Hurstville Grove $620 -14%

Bronte $1,335 -14%

Woollahra $1,295 -12%

Sydney, units

Suburb Median price YoY % drop

Pagewood $500 -23%

Tempe $360 -14%

Point Piper $873 -13%

Padstow $450 -10%

Greenacre $435 -9%

Melbourne, houses

Suburb Median price YoY % drop

Ivanhoe East $650 -10%

Mont Albert $610 -10%

Keilor $425 -8%

Box Hill $510 -7%

East Melbourne $923 -7%

Melbourne, units

Suburb Median price YoY% drop

Burnley $350 -15%

Ashwood $480 -11%

Beaumaris $520 -9%

Ashburton $540 -9%

Carlton $375 -6%

Data taken from realestate.com.au. Data based on median weekly rent between June 2019 and May 2020 for suburbs with at least 30 listings during that period.