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Vacancy rates spike as borders close
The closing of Australian borders to temporary and permanent migrants has left a hole in Australia’s rental market, with vacancy rates soaring, suggests the latest research.
Vacancy rates spike as borders close
The closing of Australian borders to temporary and permanent migrants has left a hole in Australia’s rental market, with vacancy rates soaring, suggests the latest research.
SQM Research has revealed the national residential rental vacancy rate recorded a large one-month jump from 2.0 per cent in March to 2.6 per cent in April 2020, with the total number of vacancies Australia-wide now at 88,668 vacant residential properties.
According to Propertyology’s head of research, Simon Pressley, the flow-on impacts of border closures will have an impact on short-term accommodation and rental yields but will not translate into falling property prices.
“Population growth is a long way down the list of biggest influences on property prices,” Mr Pressley said.
“2002 to 2005 was the most prosperous era in Australian real estate industry, yet the nation’s population growth rate in those years was among our lowest.
“Given that almost all overseas migrants rent property (as opposed to buy), it’s the rental markets (as opposed to property values) that is likely to be more impacted by the border closures.”
Not surprisingly, Australia’s largest two cities have been hit the hardest from a lack of migration.
Among the largest rises are the capital city CBD locations, particularly for the Sydney CBD where the vacancy rate has blown out to 13.8 per cent — a record high on SQM’s series.
“Sydney is arguably the most volatile rental market in Australia right now. Vacancy rates had already reached a record high late last year. COVID has compounded things. The 28,734 vacant dwellings advertised in Sydney as at end of April 2020 is enough to accommodate an entire city the size of Coffs Harbour,” Mr Pressley noted.
Melbourne and Brisbane CBD locations have also recorded a huge rise in rental vacancies. Melbourne’s Southbank has risen to 13.0 per cent. The CBD itself rose to 7.6 per cent, SQM found.
“Melbourne CBD, Southbank and Clayton have long been a few of the popular pockets for university students, Airbnb and some overseas migrants. COVID has adversely affected this trifecta group. The big spike in vacancy rates from March to April doesn’t surprise us,” Mr Pressley said.
Other holiday locations have also suffered, with Surfers Paradise recording a vacancy rate of 8.5 per cent and Noosa blowing out to 6.8 per cent. Suburban areas have fared better, though rises have been recorded for most localities around the country, SQM’s report concluded.
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