Renters on the move as crisis shakes up markets

Australian renters are increasingly looking to move, with the coronavirus pandemic prompting many to seek a better deal as rental markets continue to be shaken up by the crisis.

A freshly released survey from Finder showed that one in five respondents had moved house or were considering moving in 2020, equating to more than 3.8 million Australians considering a shift.

Finder insights manager Graham Cooke said the biggest motivation was finding a cheaper rental property, with renters potentially saving an average of $3,640 per year by moving.

Mr Cooke said Australian rental markets were in flux, with many capital cities gripped with rising vacancies and falling rents.

“Whether it’s students moving home due to university campus closures or a surge of AirBnB properties now up for rent, the last few months have shaken up the rental market,” Mr Cooke said.

CoreLogic data showed median rents fell by 3.75 per cent on average across Australian cities from April to May, with Melbourne and Sydney recording the biggest falls at an average of 6 per cent.

Rents in Hobart and Brisbane fell by an average of 4 per cent over the pandemic.

Mr Cooke said Finder’s analysis of the CoreLogic research found 51 suburbs where median rents had fallen by more than 20 per cent, making it a prime time for renters to negotiate a better deal.

“The reality is many Aussies are currently paying too much for their rent. If you’re in a position to move, now is the time to find a bargain,” he said. 

“If moving isn’t an option consider asking for a rent reduction. ‘

“Compare what similar properties in your area are going for and negotiate with your landlord on a rental price that more accurately reflects market rate.” 

Research by the Real Estate Institute of Australia also showed it is an optimal time for renters to move, with June quarter data indicating rental affordability was at its highest point in more than a decade.

REIA data showed the proportion of income required to meet rent payments fell to 23.3 per cent at the end of June, down 0.4 per cent from the previous three months and down 0.5 per cent from the same time last year.

Only the ACT recorded an increase in rents during the June quarter, REIA said.

Sydney swing

Rental vacancies in Sydney fell for the first time in six months in August, sparking hopes that the market could be turning after a spike in empty rental properties over the pandemic.

Data from the Real Estate Institute of NSW showed vacancies across Sydney made up 3.7 per cent of all rental properties at the end of August, a 1.3 per cent improvement on the previous month.

Vacancies in Sydney’s inner, middle and outer rings followed similar easing trends, REINSW chief executive Tim McKibbin said.

In NSW’s regions, vacancy rates remain tight, with Newcastle and Wollongong recording a slight easing over the month.

“Vacancies across most of regional New South Wales remain extremely tight,” Mr McKibbin said. 

“The Central Coast, Northern Rivers, Orana and Riverina regions were the only areas to record an increase in vacancies over the last month.

However, Mr McKibbin said the number of vacant rental properties remained markedly higher than at the start of the year. 

“Anecdotal feedback from our members indicates that the easing of vacancy rates across much of New South Wales may be attributable to landlords responding to the changed market conditions brought on by the COVID-19 pandemic," he said.

“With so many people experiencing job losses or reduced pay, many tenants have had to relinquish properties and go in search of more affordable options. Landlords faced with vacant properties are now, in turn, reducing weekly rents to entice tenants.

“The result? Tenants have the opportunity to secure a rental property that suits their budget, landlords are not faced with vacant properties, and vacancies across the state have reduced.

“It’s all part of the new ‘COVID-19 normal’ for the residential rental market.”

Perth problems

Over in Perth, rental vacancies have fallen to 1.3 per cent of the market, with rental properties expected to become increasingly scarce in coming months.

Real Estate Institute of WA president Damian Collins said the state government’s decision to extend emergency tenant protection measures was causing problems in the rental market.

WA Minister for Commerce John Quigley last week announced that the state’s moratorium on evictions and hold on rental increases would remain in place until December, rather than being phased out by the end of this month.

“The McGowan Government’s short-sighted decision to extend the emergency period for all tenancies is making a difficult problem even worse,” Mr Collins said. 

“Unfortunately, sitting tenants are unlikely to move or adjust household size as they are paying below market rents. 

“In addition, we are seeing an influx of people trying to find a new rental property in a market with a very low vacancy rate.” 

Mr Collins said the extension of emergency tenant protections had resulted in investors remaining on the sidelines, despite the WA economy rebounding swiftly due to its hard border closure.

“By extending the legislation on all properties, it means investors are likely to continue to stay out of the market, which will further reduce supply at the worst possible time,” Mr Collins said. 

“It’s not too late for the McGowan Government to change their position, as we need to get investment confidence back, so investors bring the badly needed supply of rental properties back into the market. 

“Without any change in the policy, it’s feared that a rental shortage will quickly turn into a rental crisis.”