COVID-19 is starting to impact the rental market with more properties available to let, but houses remain in high demand with rents second only to Sydney and more than 2 per cent higher than for the same time last year.
While the latest data from SQM Research shows a tightening in the market since the beginning of the year to March, in recent weeks there have been reports of a surge of properties coming up for rent as some owners remove their homes from sale and others switch from short-term to long-term rentals.
Domain reported that in the two weeks to 3 April, nearly 500 properties joined the rental market, a 29 per cent increase.
Independent’s Property Management Managing Director Hannah Gill says vacancy rates are on the rise due to an increase of properties on the market.
”Airbnbs are returning to the long-term rental market as short-term providers and private landlords are unable to fill bookings,” she said.
”Some clients who were intending to sell have decided to stay put with their property on the rental market for now and we have fewer international students travelling to Canberra at the moment.”
But she said Canberra’s vacancy rate had been next to nothing for the past 18 months or so, meaning there was room for movement before the situation became problematic for investors.
”Tenants looking for a home will hopefully benefit from more choice,” Ms Gill said.
She said a couple of apartment developments nearing completion would also add stock in the coming weeks but houses would remain in short supply.
”The demand for houses across Canberra has remained consistently high for over 12 months now. While development settlements help boost the supply for apartment rental stock, housing availability, particularly in more established areas, continues to remain limited,” she said.
Ms Gill said exacerbating this were people who had been posted overseas returning to Australia, and looking to invoke their posting clauses to return to their homes, while others were looking for rental properties.
She said the economic slowdown is being felt in the property market and Independent was working with a number of clients – tenants and landlords – who have been impacted by job losses or a significant reduction in their hours.
”It’s a challenging situation for everyone involved,” she said. “Not every tenant qualifies for the government incentives or JobKeeper, and not every landlord is in a financial position to assist, so each circumstance is unique,” she said.
”To add to those challenges, while as an industry we are trying to do the right thing to support and facilitate these discussions, there isn’t a lot of clarity or framework from government yet around both parties’ rights and responsibilities or how certain situations will be treated.
”We are also seeking clarity from landlords’ insurance companies as to how they will view and assess rent adjustments.”
SQM Research says the average asking rent in Canberra for a house rose 2.6 per cent to $647 a week in the month to 12 April.
Units were flat, with a negligible 0.1 per cent blip, at $464 a week. In January average house rents were $633 a week, after a fall of 2.4 per cent on December numbers.
Both the asking rents for houses and units were second only to Sydney, where houses are at $667 a week and units $484.
Vacancy rates tightened from the December high of 1.7 per cent to 0.9 per cent in March.
That is the same number as March last year, and in fact there were more properties available – 589 compared with 575. In February there were 651 vacancies.
But the demand is, as ever, in quality houses, and rents are 2.4 per cent higher than 12 months ago.
Unit rents are also up over the year, by 1.8 per cent but, as Ms Gill said, a solid supply of apartments is coming on to the market and more are in the pipeline.
Canberra’s house rents bucked the national trend, as capital city asking rents decreased 3.2 per cent for houses and 2.9 per cent for units to record asking rents of $544 per week for houses and $428 per week for units.
Sydney, Melbourne, Brisbane and Hobart all recorded decreases in asking rents for both houses and units over the month. Perth and Adelaide were the only capital cities to record rent increases for both houses and units.
Perth increased by 1.9 per cent for houses and 0.8 per cent for units, while Adelaide recorded a 0.3 per cent increase for houses and 1.4 per cent for units.
Vacancy rates were stable but Managing Director of SQM Research, Louis Christopher expects that to change.
”The minor decline in most capital cities’ vacancy rates for March was somewhat surprising given the uncertainty around the economy,” he said.
”With job losses, a freeze in migration and an expected sharp rise in short-term accommodation vacancies, we are likely to record significant increases in rental vacancy rates as 2020 progresses.
“We note the 3.2 per cent drop in asking rents for houses over the month which may well be as a result of many short-term accommodation dwellings entering into the longer term leasing market, and overall, a sign of things to come.”