Rental vacancies spike in Sydney, Melbourne
Vacant rental properties are piling up in Sydney and Melbourne, with new data from CoreLogic showing the closure of Australia’s international borders is having adverse impacts on residential leasing markets.
Sydney’s rental vacancy rate hit 4.5 per cent in May, the highest in the nation, while Melbourne’s rose to 3.6 per cent, according to the latest research from CoreLogic.
CoreLogic Australian head of research Eliza Owen said much of the increase in those cities was due to the lack of overseas migration.
Data from the Australian Bureau of Statistics this week showed there had been a 99.7 per cent fall in international arrivals due to the COVID-19-related border closures.
“Most people that come to Australia from overseas, whether they are a skilled migrant, a temporary visa visitor or a refugee, will rent when they first come to Australia,” Ms Owen said.
“ABS data on migration suggests that Sydney and Melbourne received more than 70,000 net overseas migrants over 2018-19, which is far higher than the other capital cities.
“This may be why an increasing amount of properties across the cities are sitting vacant.”
Ms Owen said the lack of foreign students arriving had also impacted Sydney and Melbourne, with universities in Australia’s biggest cities most popular with offshore students.
Melbourne and Sydney also attract more investors than Australia’s tertiary cities, accounting for 65 per cent of property investment loans in the past 10 months.
“Investor activity contributes to rental supply,” Ms Owen said.
“When paired with the large number of units that have been built over the past few years, many of which are rentals, it’s clear that rental supply has increased more in Sydney and Melbourne relative to the other cities.
“Higher supply levels against a backdrop of weaker demand is a recipe for lower rents.”