The rental markets of Sydney and Melbourne are starting to relax as supply in each city continues to increase as demand runs out, according to the latest market report from. CoreLogic.
According to CoreLogic, the share of rental housing advertised increased in both cities in May, countering the downward trend registered by the rest of the capital's regions.
The share of the rental stock announced rose to 4.5% in Sydney and 3.6% in Melbourne.
Eliza Owen, head of residential research at CoreLogic, said that even though 3.6% seems small, it represents an increase of more than 3,000 rent announcements in Melbourne, which means there are had 27,000 properties for rent during the month.
"An increase in the market share of inventories suggests higher vacancies and a looser rental market, which would coincide with lower rental prices," she said.
Read also: Are big changes in rental rules killing investor demand?
Why this increase?
The increase in the rental stock announced is only apparent in Sydney and Melbourne. While rental markets across Australia have been affected by the COVID-19 epidemic, Owen said that Sydney and Melbourne must bear the brunt of these impacts.
Overseas migration is one of the main determinants of rental housing. With closed borders and travel restrictions, the demand for rental accommodation has slowed.
Of all the capitals, Sydney and Melbourne remain the main destination for overseas migrants. In fact, the two cities welcomed more than 70,000 migrants in the 2018-2019 fiscal year – which is significantly higher than the migration balance recorded by the other capitals.
Owen said that another reason was the exposure of Sydney and Melbourne to international students.
"With the number of foreign students down almost 100% from a year ago, as well as domestic students studying largely at home, the demand for student hires from higher education has been exhausted, "she said.
It should also be considered that New South Wales and Victoria represent the largest share of investment in housing.
Owen said that almost two-thirds of the investment loans in the past 10 months were from these two states. Investor activity, she said, contributes significantly to the rental supply.
"When associated with the large number of units that have been built in recent years, many of which are rentals, and it is clear that the rental supply has increased further to Sydney and Melbourne compared to other cities. Higher supply levels against a backdrop of lower demand is a recipe for lower rents, "said Owen.
Main suburbs:
Berala
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revesby hts
,
West rockhampton
,
lockridge
,
albion
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