One in six rental homes remain empty
Rental properties in the Sydney CBD continued to empty last month as COVID-19 pushed more tenants out of the market.
Close to one in six rentals - 16.2 per cent - were vacant in May, more than double the vacancies recorded at this time last year, SQM Research figures showed.
Vacancies also increased across the Greater Sydney area, rising from 3.9 per cent of rental stock in April to 4 per cent of rentals in May.
Sydney now has the highest vacancy rate in the country, SQM noted.
The vacancies have put pressure on landlords to cut rents, with the average advertised rent on houses nearly 7 per cent below what it was last year, while unit rents were down an average 5.2 per cent.
Higher inner Sydney vacancies were the result of a decline in international student numbers, Airbnb rentals becoming available on longer term leases, and many hospitality workers moving back in with parents.
A similar trend was observed in the inner suburbs of other major capital cities: 13.3 per cent of Brisbane CBD rentals were vacant last month, while in the Melbourne CBD it was 9.3 per cent.
SQM Research director Louis Christopher said vacancies may be at a short-term peak.
"Weekly rental listings suggest a slight decline in supply for the first half of June," Mr Christopher said.
"I think what is happening here is Airbnb property owners have now pulled back from listing long-term and are now waiting this time out in the hope that the borders will be open shortly."
Vacancies would likely stay at high levels even if there was a continued decline in rental listings, Mr Christopher added.
"Let's just remember the bulk of underlying demand growth in recent years has come from net migration. Also note that many first home buyers are tenants," Mr Christopher said.
"With an expected 170,000 dwelling completions for this year and still no imminent opening of the international border, I still think rental vacancy rates are going to remain elevated for 2020."
Real Estate Institute of NSW chief executive Tim McKibbin said landlords were under pressure due to recent COVID-19 market shifts.
"With so many people experiencing job losses or reduced pay, it's not surprising to see inner-city properties with higher weekly rents being relinquished by tenants, either for more affordable options in suburbs more distant from the CBD or to move in with family members," he said.
"We're also seeing a continuation of the trend for short-term accommodation properties being listed for long-term rentals. With tourism plummeting, short-term rental cancellations have skyrocketed, meaning landlords have had to rethink their investment strategy and list their holiday rental properties on the long-term market."
Nic Fren recently moved into a new apartment in Rushcutters Bay and said he was "very happy" with the price. "I was picky with properties. This place was just perfect," he said.
"You know something is up when agents start phoning you about available properties. They never did that before."
Renter's agent Melissa Maimann said rental discounts varied by location and were harder to come by in the southwest, northwest and Sutherland Shire because the base of tenants was not as affected by COVID-19.
Originally published as One in six rental homes empty