Sydney markets showing impacts of COVID-19
Renters in Sydney are bailing on near-city suburbs en masse, while at the same time sales data is starting to illustrate the impact of the economic wreckage wrought by COVID-19.
New data from the Real Estate Institute of New South Wales showed rental vacancies rose for the third consecutive month in May to hit 4.1 per cent, up 0.3 per cent on the previous month and 1.1 per cent from March.
REINSW chief executive Tim McKibbin said Sydney’s Inner Ring vacancy rate rose sharpest, from 0.7 per cent to 5 per cent, the highest rate recorded since June 2002.
Middle Ring vacancies rose to 4.6 per cent, while vacancies in the outer ring fell 0.4 per cent to 2.7 per cent.
Mr McKibbin said the results indicated the extent of the coronavirus crisis’ impact on the market.
“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,” Mr McKibbin 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 sky-rocketed, meaning landlords have had to rethink their investment strategy and list their holiday rental properties on the long-term market.
“Together, these factors have resulted in an increase in rental vacancies in the Inner and Middle Rings, which is a trend that’s likely to continue in the coming months.”
The rental data follows Sydney’s first median house price drop in around 12 months, with CoreLogic’s latest update showing the city’s median slipped by 0.6 per cent in May.
CoreLogic said Sydney’s median house price at the end of April was $1.02 million, with the median unit value coming in at $772,204.
Managing director of property advisory group Patrick Leo, James Nihill, said any momentum in Sydney’s residential property market was halted sharply by COVID-19.
The latest data from the Real Estate Institute of Australia showed Sydney's median price had gained 2.8 per cent in the three months to March 31, with that period immediately preceding the coronavirus crisis.
“The market stopped as suddenly as a switch being flicked off with many sellers opting to defer campaigns until later in the year,” Mr Nihill said.
“Given how drastically the market changed, the impact on Sydney’s prices is only marginal and in fact prices are still up more than 4 per cent from this time a year ago.”
Mr Nihill said he expected Sydney’s median house price to follow historial form of resilience during economic downturns, with government stimulus packages and banking support to outweigh the uncertainty of COVID-19.