The ghost city of Great Southern Manchuria

SQM Research’s new weekly rental listings data shows an extraordinary increase in the number of apartments listed for rent across Melbourne:

According to SQM, there were 21,889 apartments listed for rent in the week to 9 November versus 8,154 houses listed for rent.

Separate data released by Domain also shows that the number of dwellings listed for rent across Melbourne swelled by 165% in the year to October:

 

Whereas Melbourne’s rental vacancy rate ballooned to 4.6%:

Not surprisingly, the vacancy rate is highest near Melbourne’s CBD owing to the loss of international students:

The CBD and surrounds continued to see a huge rise in the vacancy rate – 14.4 per cent compared with 13.3 per cent last month, and 2.4 per cent in October 2019. It’s the highest vacancy rate of any local government area in the country.

Melbourne’s apartment market has already experienced the sharpest rental decline in the nation, down 6.6% in the seven months to October:

Based on the 2020 federal budget’s population projections and assuming dwelling construction rates fall to decade lows, Melbourne is facing a truly gigantic supply glut.

Victoria is facing 51,000 net dwelling additions versus 13,000 population growth in 2021 and 48,000 net dwelling additions versus 30,000 population increase in 2022:

That’s an enormous amount of stock scheduled to hit the market without people to fill it.

Melbourne city has transformed into the ghost city of Great Southern Manchuria. The education funnel is stoppered. The pipeline of mass immigration is empty. The vision of successive governments of sidling under the skirts of Chinese services exports is derelict.

As such, Melbourne’s vacancy rate will continue to swell and rents will inevitably continue to fall.

Unconventional Economist
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Comments

  1. New Zealand’s housing hyperinflation will drive young Kiwis across the ditch again … as Australia’s ‘affordability advantage’ expands even more …

    Record house prices not caused by Reserve Bank – Adrian Orr … TVNZ

    https://www.tvnz.co.nz/one-news/new-zealand/record-house-prices-not-caused-reserve-bank-adrian-orr

    How much debt is too much for Kiwi households to bear? … Danial Dunkley OPINION … Stuff NZ

    https://www.stuff.co.nz/business/opinion-analysis/300155588/how-much-debt-is-too-much-for-kiwi-households-to-bear

  2. Anecdata – been going to rentals in Melbourne inner North as wife and I need to upgrade for expanded family. Been to 10 properties so far, 4 have offered to cut advertised rent. Another 3 have had super aggressive agents following us up with calls to apply.

    General consensus is long term vacancies and landlords taking a bath because of no migration. Hope to to take advantage now before Scomo attempts to reopen floodgates.

    • Yup watching inner north getting smashed – in both rentals and house prices.

      Data is just flat out wrong on house prices – market is brimming over I would say 5 houses are listed for every one that is sold – the ones that are being sold are keeping the market buoyed.

      • PaperRooDogMEMBER

        Here is Sydney could be the same as have seen 2nd sign “SOLD off market”, though nothing like inner Melb, but it’s happening & suggests figures ain’t what they used to be

  3. The flood gates will open soon – no students/migrants means lower rents, which in turn property investment doesn’t become worth it anymore and investors let go of their properties and down goes the apartment market. The government won’t allow that. For sure, they’ll throw the kitchen sink, free quarantine, discounts off school fees, credits etc.

    • Oh yep like theyve been saying all year.
      Except even scotty estimated immigration to be down 85% in 2021. Thats right.. in the year that is even yet to start.

      • PalimpsestMEMBER

        An interesting question. The claimed effectiveness of the vaccines is quite high. The Oxford one even seems to work fairly well in older people. There are a couple of issues – it will take a while to manufacture and deploy. Especially the Moderna type (RNA) because they have demanding temperature requirements for distribution. The more traditional types are easier to manufacture and deploy, but it will take a number of months.

        Herd immunity requires a large takeup rate. That will also be tricky. There’s been a spectacular amount of FUD created, much funded by entities attacking the US or groups just wanting business to be open. At the extreme there’s one nurse reporting how she doesn’t know how to carry on when faced with dying patients shouting at her to find out what they ‘really’ have because the ‘virus is a hoax’.

        Is it a ruse to get us out and about. That’s the interesting question. That’s certainly the outcome in the US. People are relaxing their guard because the vaccine is coming. But it’s not here now. And catching COVID now, without vaccine protection can cause some pretty nasty long-term effects and widespread organ damage, assuming you survive. Our task then, is to remain vigilant and COVID free until we actually get the needle in the arm.

        • I don’t give a fly f about Corona. I have zero fear that I or anyone I know will catch it ..even if flood gates are opened to immi. I still don’t know anyone who had it, died or suffered ‘ long term effects’ except cove idiots still masking & banging on.
          Zero interest in vax & will politely decline. I don’t care for herd immunity theory. For me & my renting mates it’s a win win no vax, no immi …cheap rent:)

  4. The inevitable global trends of dispersal and decentralization … examples from the UK …

    Rents in big cities fall by up to 45% as millions of Britons working from home no longer need to live near the office … UK Daily Mail

    https://www.dailymail.co.uk/news/article-8952987/Rents-big-cities-fall-45-Britons-work-home.html

    It is the speed of these changes that is quite remarkable … having only started back late March / April of this year.

  5. No other cities have international students flying in.

    No other cities have international tourists or incoming workers / visitors arriving.
    Yet for some reason only Melbourne is showing a huge uptick in rental vacancies.
    Only Melbourne looks to have a growing problem of empty apartments.

    Perhaps Melbourne having terminated it’s hospitality industry, shuttered whole industries, retail and office buildings for months is lacking in people to pay rent on slumbox apartments.

    While I don’t disagree with the notion we have a looming supply side problem in Melbourne, instead of trotting out the same slides and slogans it would be nice to see some new material.
    One of the key differences between Melbourne and the rest of the country, is a loss of employment opportunities for students and younger workers. These cheap ‘investor’ grade apartments are too expensive for centrelink/unemployed students but undesirable without night life, restaurants or on campus activities.

    Can you imagine spending the last six months living in tiny shoe box with no opening windows, no access common areas or facilities (closed due to covid) in a city where the only thing open are supermarkets, 711s and the post office.

    Why would anyone want to rent an apartment, in Melbourne.
    For anyone that would rent in the city, how secure are they in their employment, what happens when we go back into lockdown?

    If it was just a lack of international arrivals it would affect all capital cities. While there are large numbers of people returning to Australia through quarantine who may be choosing to not return to Melbourne or waiting until the lockdown lifts, it is starting to smell like Melbourne cbd apartment living is not in high demand at the moment.

    • Arthur Schopenhauer

      Both Melbourne Uni and RMIT are an easy walk from anywhere in the CBD. RMIT, Monash & Melbourne make up half of the top 4 OS student institutions in Oz.

      CBD campuses, RMIT & MelbU having over 40,000 OS students between them.

    • Yeah i agree. All other states have the same environment.
      Would love to see.. how many dog boxes melb built in boom times and also, that their economy is so reliant on service economy that when that economy is shuttered it causes a big downturn.
      For mine i think the housing crisis will start in Melbourne.

    • Great post. Other cities haven’t had the lockdowns and the shredding of businesses. Those who stand with Dan do not run businesses, are employed in Government or construction and are doing very nicely. It is only when the developers fall over next year that they will realise everything isn’t rosy.

  6. So i was watching this this Ted talk about this guy who believes he has an answer to the causes of depression and anxiety.
    His talk was rambling and covered a large area but in a summary he came out with this statement.
    “The more you believe you can buy and display your way out of sadness and into a good life, the more likely you are to become depressed and anxious.”

    See i think thats mostly a load of crap. If you can get the money (legally) somehow you can buy your way out of sadness and anxiety into a good life. The depression and anxiety is not caused by desire for money. Its caused buy not being able to get enough of it to have a good life.

    • People tend to think and talk about what they value.

      Intelligent people discuss ideas.
      Moderately intelligent people discuss events.
      Stupid people discuss people.
      Absolute morons value “things”.

      If you think having “things” will give you happiness then all power to you.

      • “Things” may not get you happiness, but lack of things will certainly get you unhappiness. Go ask a homeless person how they feel.

        Edit: I’m willing to bet you’ve never experienced a lack of “things”.
        Much like air, you only realise it’s worth when it’s no longer available.

        • Maslows heirarchy of needs:
          At the bottom you have physiological needs – shelter, food, water
          In the middle you have psychological needs – self esteem/ esteem, loving relationships, safety
          and at the top you have self actualization – mans search for meaning in a seemingly meaningless existence

          I agree that having a lack of ‘things’ (shelter, food, some level of comfort above living in a hovel) makes one unhappy, but once these basic needs are met, it’s the self reflective and wiser people that begin to discuss ideas over material things.

          Material things will only get you so far, its self actualization that will bring true happiness. In my opinion this is analogous to nirvana, the state of enlightenment the buddha speaks of. Alas I digress, Melbourne is the centre of the Ponzi and we’re seeing it in all its beautiful nakedness right now!

          • All wonderfully idealistic, but out in the real world what makes people happy is their own perception of being better off than others, and perceiving themselves being worse off makes them unhappier.
            Your happy clappy theory sounds great but just like economics it all falls over when dealing with actual people.

    • robert2013MEMBER

      Thought I’d clicked reply to you, but seems I didn’t. See below.
      Repost:
      Depression and anxiety are caused by not having your basic needs met: food, shelter and belonging. If you have sufficient food and shelter (most do) chances are belonging is the problem. It’s difficult to belong to a society that treats shelter and location as a commodity. It’s difficult to belong when all the things people did to make communities have been capitalised or abandoned. We have fewer friends and family than ever before. This will not change until we value the efforts of those around. We do not. We seek cheaper alternatives from overseas and price our youth out of housing and work. People behaving like this are not a nation. There is nothing to securely attach a sense of belonging to for many many people. That is on all of us.

    • “The depression and anxiety is not caused by desire for money. Its caused buy not being able to get enough of it to have a good life.”
      The problem with this is “good life” is always measured relative to others so a significant portion of people will always not be able to get enough.

    • Arthur Schopenhauer

      There’s a threshold of having enough money, so as not to worry about money everyday. The more status trinkets purchased on credit (Cars, etc) , the higher the threshold.

      Having a secure place to live (buying a house in our society), seems to be foundational to happiness.

      Edit: Belonging to a neighborhood and participating in its activities, and helping others is really what owning a house catalyzes. Much harder to do when renting in a big city.

      • Disagree. Not a foundation. Just one way. Some people like me are quite happy to be renting and have my security in things other than real estate in Melbourne

    • Totes BeWokeMEMBER

      Money doesn’t make you happy, but poverty sure makes you sad.

      ATM, all Australians are filthy rich, despite what we read here about welfare and social housing.

      At 50m Australians, globalisation, national assets sold off, what’s coming is global-standard poverty, working poor, and a handful of elites.

    • Thousands of years of philosophical thought from around the world disagrees with the idea that you can buy your way into happiness*. That line of thinking is the result of mass marketing which is designed to deliberately turn us into unhappy people so that we consume and thus prop up the debt based ponzi economy.

      * Excluding the basic needs as per Maslow’s heirachy of needs

  7. That’s a fascinating set of figures, Hobart also way down or rather way up in vacancy, Perth and Darwin everyone has fled there. ? Hobart and Melbourne were probably both expecting to take a lot of new immigrants in 2020 and it hasn’t happened. It feels like a lot of people are moving to Canberra judging by what I’ve seen in the rental market. Maybe they re moving into the homes that would otherwise have gone to immigrants and the few missing students and much to the delight of landlords housing would have been impossible here. there’s a lot of housing being built in Canberra. Be interesting in a year’s time.

      • Well depends what you mean. In the same way I read recently that Sweden is as neoliberal as everywhere else, now, and in the same way people have commented here that everyone working in Australia is now on the public payroll and the federal public service is actually quite dispersed around Australia, we’re not THAT different. But yes a happy valley nonetheless.

  8. I would be rstrained in the jubilation. Sadly for the uber bears Moderna looks to be replicating the results of Pfizer.
    Whilst it is true evil big pharma may have devised a vaccine which will turn us all into myopathic zombies over 5-10 years it is also worryingly possible science has advanced and might provide an effective vaccine. Galling, I know, but something to reflect on while shaking one’s fist at the sky.

  9. robert2013MEMBER

    Depression and anxiety are caused by not having your basic needs met: food, shelter and belonging. If you have sufficient food and shelter (most do) chances are belonging is the problem. It’s difficult to belong to a society that treats shelter and location as a commodity. It’s difficult to belong when all the things people did to make communities have been capitalised or abandoned. We have fewer friends and family than ever before. This will not change until we value the efforts of those around. We do not. We seek cheaper alternatives from overseas and price our youth out of housing and work. People behaving like this are not a nation. There is nothing to securely attach a sense of belonging to for many many people. That is on all of us.

    • Totes BeWokeMEMBER

      Excellent comment. I agree. It was entirely predictable with immigration at these rates (though I had no idea house prices would go this high). Immigration is the core problem we need to vote against.

      I know my family and friends are much more scattered because of it. Which is rubbish for casually catching up, and is now an event that’s more a chore than fun.

      What kind of society votes for this sht? We have lost the plot, and the price we’ll pay is immense.

      • When will you understand that in a westminster “democracy” the people vote for nothing at all other than which particular preselected group of people is going to screw them over, probably in exactly the same way, and not any particular policy.

          • To quote the red headed one “Please Explain”

            Edit: Large chunks of the populace being either dumb or uneducated is merely fact and is not changeable therefore change is unpossible, even with your mysterious theory that you aren’t sharing.

          • You really need to start doing some critical thinking for yourself you know. A lot of stuff you were told as a kid simply isn’t true.
            Politicians don’t “represent” you. The police aren’t there to “help” you. “Saving” is not a path to becoming wealthy.

          • Totes BeWokeMEMBER

            “Politicians don’t “represent” you. The police aren’t there to “help” you. “Saving” is not a path to becoming wealthy”

            You accept that? Are you on crack?

            So you accept Labor aren’t there for you, yet you defend them?

            Man, no wonder we’re in this mess. You’re the same delusional guy saying our democracy gives us just two choices.

            And I’m the one who needs to think critically?

            “even with your mysterious theory that you aren’t sharing”

            I’ve shared it plenty. Replace the Labor party.

    • > It’s difficult to belong when all the things people did to make communities have been capitalised or abandoned.

      Neoliberalism really has much to answer for. Time to make society #1 again.

  10. “That’s an enormous amount of stock scheduled to hit the market without people to fill it.”
    Dan is going to buy some of them as part of his social housing “build”. We will find out how many on Nov 24.

    • PaperRooDogMEMBER

      Maybe he’ll need loads of units so he has somewhere to put all those foreign workers his belt & road will need now that another trade dreal has, no doubt, opened the doors even more. If only we the Aussie public knew what has been agreed to in our name.

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