SQM Research has released rental report for June, which revealed a reduction in vacancy rates but a sharp fall in asking rents.
As shown below, all capital cities recorded declines in vacancy rates over the month. The national vacancy rate is also 0.1% lower than the same time last year:
CBD vacancy rates remain elevated, but have fallen from May’s highs:
Sydney CBD has dropped to 13.8%, down from 16.2% in May, Melbourne’s CBD and Melbourne Southbank have also declined to 8.8% and 16.2% respectively. Adelaide CBD has dropped to 7.1% and Perth CBD is now 5.3%.
However, Brisbane CBD’s vacancy rate has increased from 13.3% in May to 14.0% and Sydney’s Palm Beach is now 18.0%, up from 16.7% in May.
Turning to asking rents, SQM notes the following:
Over the month, Capital City asking rents decreased 3.1% for houses and 4.5% for units for the week ending 12 July 2020 to record asking rents of $534 per week for houses and $421 per week for units.
Sydney, Melbourne and Adelaide recorded declines in asking rents for both houses and units over the month. Whilst Brisbane and Perth continue to record increases in house and unit asking rents. Canberra and Darwin have had declines in house asking rents but recorded increases in unit asking rents.
SQM pins the fall in vacancy rates on short-term rentals like Airbnb’s being returned to the long-term market, but still expects the rental vacancy rate to remain weak for the foreseeable future:
We believe the surprise fall in vacancy rates is due to Airbnb property owners giving up on the longer term leasing market and moving back to short term leasing, especially in light of the July school holiday period and the opening of some state borders.
The fall in rents over the same period for a numbers of our capital cities suggests that the weakness in the rental market remains.
Going forward, our expectation is the Australian rental market will remain weak for the duration of 2020 or until such time as the international border reopens and we as a community have past the worst of COVID19.