A current over-supply of properties in the rental markets of Australia’s biggest cities is seeing rental prices fall – something that will have an impact on landlords and investors.
According to the latest data from the ANZ CoreLogic Housing Affordability report, advertisements for rental properties in inner-Melbourne had increased by 57%, with data related to the Sydney rental market in the city and inner-south recording a jump of 53%.
The COVID Impact on Rental Revenue
Loss of income for tenants who were forced to change living condition due to lost work as a direct result of the pandemic, combined with travel restrictions that have forced some property owners to do a hasty pivot and convert properties that were once operating as holiday accommodation into regular rentals, have all influenced the glut of rental properties currently on the market. With the vaccination roll-out happening slowly and COVID numbers in some parts of the world continuing to increase, international visitors are not likely to return to our localised accommodation market for sometime, and experts predict the rental price decline may remain on the down-turn until as late as 2023.
Big Cities Versus Regional Rental Investment
As the pandemic changes the way people work, and with more people working remotely, this rental revenue decline is a phenomenon affecting our nation’s biggest cities.
In regional centres, many real estate professionals are reporting the opposite story, with less rentals on the market, due to people making that sea or tree-change removing rental properties from the rental market – a shift that is seeing competition for rental properties (and the rental price hike associated with greater demand) increase.
Landlords Should Do Their Research
Being a landlord can be a lucrative investment but for those unable to sustain previous rental incomes due to the impact of falling rental prices, research into other growing rental markets could reveal other investment strategies. With real estate sale prices climbing in many parts of the country, it does seem to be a buyer’s market and, by selling a rental property in a big city, to trade for a newly purchased investment property in another growing location, landlords could experience positive returns, with the right information guiding their decisions.
To talk to a trusted home mortgage broker, contact our team at Lending Specialists.