Almost half the empty properties in some upmarket parts of Australia are now available for rent at heavily discounted rates.
Landlords in Sydney were particularly desperate to find tenants as the COVID-19 lockdowns caused widespread unemployment and pay cuts, significantly reducing renters’ budgets.
Investors had been forced to slice asking prices in suburbs like Woollahra in Sydney’s wealthy east, where 46.3 per cent of properties were advertised with discounted rent in May – more than double February’s 18.5 per cent – real estate sales website Domain has revealed.
At Woollahra in Sydney’s wealthy eastern suburbs, 46.3 per cent of properties were being advertised offering discount rent in May, more than double February’s 18.5 per cent, real estate sales website Domain has revealed.
At nearby Bondi Junction, 44.8 per cent of investment properties were available for a reduced price – more than twice the 21.2 per cent level three months earlier before the lockdown.
A dramatic decline in international tourists also made Bondi Beach more affordable, with 36.4 per cent of rental homes available at a reduced price, compared with just 14.3 per cent in February before the World Health Organisation declared a COVID-19 pandemic.
Sydney was home to nine of the top ten areas of Australia for discounted rent, with landlords also struggling to find tenants in the inner-west, the south-east and the lower north shore.
Melbourne’s central business district made the list, with 41.2 per cent of rental properties advertised at a discounted rate.
Domain senior research analyst Nicola Powell said it was a renters’ market near the city.
‘The power is certainly with tenants,’ she told Daily Mail Australia.
‘There are areas where the tenant power is stronger – during this period, it allows renters to negotiate.’
Dr Powell said the economic recession, sparked by COVID-19 lockdown, had encouraged students to continue living with their parents or even move back home as part-time work in the hospitality industry dried up.
‘Those areas where traditionally is a student population, it will be impacted,’ she said.
‘During this period, everyone has shifted to online learning – even the domestic students that perhaps would have leased property won’t be doing that.
‘They’ll prefer to stay at the family residence.’
Border closures were also affecting inner-city rental markets as foreign students were unable to re-enter the country, while some outer suburban areas remained relatively unscathed.
‘The thing that could impact the inner Melbourne and city area of Sydney is the drop-off in overseas migration and tourism,’ Dr Powell said.
‘That will still be at play.’
Melbourne’s central business district just made the list, with 41.2 per cent of rental properties advertised at a discounted rate
Outside of Australia’s two biggest cities, almost a third or 32.7 per cent of rental properties at Milton, in Brisbane’s inner west, were available for discounted rent
Reduced rents were not restricted to Sydney and Melbourne.
At Milton in Brisbane’s inner west 32.7 per cent of rental properties were available at a discounted rate.
East Victoria Park, in Perth’s gentrified inner south-east, had 30.6 per cent of homes being offered for lease for less.
North Adelaide had a similar proportion of cut-price leases at 27.9 per cent.
Hobart’s south and west were second only to inner Sydney in terms of percentage of discounted properties, with 33.9 per cent of rentals in that category.
The May rate had almost tripled since February.
Inner-city areas weren’t the only places offering cheaper-than-usual rent.
At Sydney’s upper north shore, taking in wealthy suburbs north of Roseville, 27.9 per cent of rental properties were available at a cheaper price.
The outer north-west, taking in Dural and Baulkham Hills, had 27.9 per cent of rental homes being offloaded at a discount.
The Northern Beaches were also more affordable to lease, with 34.5 per cent of Dee Why properties listed with a lower asking price.
Sydney had the dubious honour of claiming six of the top ten spots by region.
Melbourne claimed two positions, as did Hobart.
In North Adelaide, 27.9 per cent of rental properties are being advertised at a lower price
Many of the worst-affected rental markets were in areas with a high proportion of services-sector workers who were collecting $1,500 a fortnight under the temporary JobKeeper wage subsidy.
That $70billion stimulus program was due to end in September, the same month the banks were to end the six-month holiday on mortgage repayments, and that was when the rental market was expected to reach its nadir.
‘At that point, it depends on how quickly and robustly the economy bounces back,’ Dr Powell.
‘Once that mortgage holiday stops and JobKeeper payments stop, that could be a weak point.’
This could see tenants continue to enjoy heavily discounted rent for many months to come.