CoreLogic’s December housing market report, released yesterday, included the below interesting chart showing the monumental collapse in Melbourne and Sydney apartment rents following the COVID-19 induced collapse in immigration:
According to CoreLogic:
…weak demand and high supply has driven a sharp drop in rents. Demand for inner city unit rentals has been significantly impacted by stalled overseas migration, especially from lower overseas student numbers. Weak demand for inner city unit rentals has been exacerbated by a recent history of high rise apartment construction in Melbourne and Sydney, with the pipeline of new units that are still under construction remaining well above the decade average. Melbourne unit rents are down -7.6% over the calendar year and Sydney unit rents are down -5.7%. Weak rental conditions across the unit sector are likely to persist until overseas migration starts to ramp up and the higher levels of supply are absorbed.
The bulging rental supply in these two sub-markets is also illustrated by SQM Research’s rental listings data, which shows that there were 22,826 / 20,164 units listed for rent in Melbourne / Sydney as at 1 January 2021:
The outlook for apartment rents for these two cities remains poor. The National Housing Finance & Investment Corporation (NHFIC) last month forecast that Greater Melbourne’s and Greater Sydney’s housing markets would be thrown into structural oversupply as immigration collapses:
This is obviously great news for renters and a positive byproduct of low immigration.