New data from Domain shows that Melbourne’s rental vacancy rate has nearly doubled since March, from 1.7% to 3.2%. And this is forcing down rents:
…more than a quarter [of the nation’s vacancies] were in Melbourne, where the vacancy rate pushed up to 3.2 per cent over the month, as the city’s second lockdown to curb the coronavirus pandemic impacted on demand for rental properties.
The rate increase – up from 3 per cent in June and 1.7 per cent in March – was a result of more than 1200 additional Melbourne properties becoming vacant over the month of July, which saw the city return to stage three coronavirus restrictions. It brought the total number of vacant Melbourne properties to more than 17,800, according to Domain data.
The rising vacancy rate was to be expected in Melbourne, which entered into stage four restrictions this week, Domain senior research analyst Nicola Powell said.
“Melbourne deviating from other capitals was expected given it’s well into the next lockdown, so any renewed short-term demand on rentals has been stopped,” Dr Powell said.
The elevated vacancy rate could continue to put downward pressure on rents, which have already seen median price declines of 3.5 per cent for houses and 2.3 per cent for units.
Elsewhere, rental vacancy rates tightened in July as the nation moved out of COVID-19 restrictions:
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The severe increase in rental vacancies in Melbourne makes sense given it has been hardest hit by COVID-19 lockdowns. It is also most exposed to the collapse in immigration:
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
