In the year to March 31, capital city apartment rents fell 3.8 per cent while house rents rose 5.2 per cent, CoreLogic data released this week shows. But the property data company’s head of research, Tim Lawless, said Melbourne and Sydney’s apartment markets, which were among the hardest hit by COVID-19 border closures, had started to stabilise.
Gross rental yields fell to record lows in March, with Sydney at 2.7 per cent and Melbourne at 2.9 per cent, which relates to the holding costs investors face by comparing rental income to the property value. A higher rental yield is usually attractive to property investors. This is the first time on record Melbourne’s yield has fallen below 3 per cent.
“COVID accelerated trends – the flight to lifestyle and remote working – but as the wave comes back in there will be a corresponding increase in rent,” he said. “There hasn’t been a dramatic jump in rent yet but properties are [finding tenants] more quickly.”In May 2020, the Sydney CBD apartment vacancy rate hit 16.2 per cent on SQM Research data. This had fallen back to 6.7 per cent by February. Melbourne CBD hit a peak of 10.8 per cent in September and fell back to 8.
“People are starting to move back into CBD locations,” Mr Christopher said. “Melbourne will recover to an extent but the recovery might not be as strong as Sydney’s and Brisbane’s as they’ve had an exodus of interstate migration to other states, the lockdowns have been more severe and it has made people more cautious about coming back to the city.”
JennieDuke Oh, good. We were all so worried about property investors and developers.