Rental markets across Australia appear to have split into two distinct paths since the start of the COVID-19 epidemic – as inner-city areas experience decline, suburbs exteriors go in the opposite direction, according to a CoreLogic study.
In the study, CoreLogic focused on Brisbane, Sydney and Melbourne and found that properties closer to these cities are more likely to report declines in rental values.
"Several factors distinct from the COVID-19 slowdown have made downtown rental markets particularly susceptible to declining rental values. These include the relatively high exposure to migration to overseas as a source of housing demand, "said Eliza Owen, head of residential research at CoreLogic.
Owen said the outer suburbs where employment has been less affected by the pandemic have seen rent increases. The Sydney Blue Mountains, for example, recorded the largest increases in rental value, at 3.3%.
However, Owen stated that the reason for the rental value gains in the outlying suburbs is in fact unclear. One explanation could be that these regions have been less exposed to factors that drive demand decline, such as overseas migration.
"Anecdotal reports claim that a raffle card for the outer suburbs are relatively cheap rents, and low density as well as remote work reducing the hurdle of commute times since areas further away from larger employment nodes, ”she said. ]
Since most of the suburbs that reported gains have cheap rents, Owen said stimulus packages for low-income households have also increased rental demand, resulting in an increase.
"The reduction in this tax support could lead to a wider drop in rents over the next six months," she said.
The National Rent Index had recorded consecutive increases in the months leading up to March of this year. Owen said the epidemic had altered that trajectory, with the closure of international borders creating a significant shock to rental demand. Job losses in industries like hospitality, tourism, and the arts have also affected demand for rental properties.
Of all the capital cities, only Adelaide and Perth posted an increase in rents in the June quarter. The Adelaide real estate market has been less susceptible to COVID-19, due to the relative stability of the market and low investor participation in the market.
The stability of the Perth rental market, by contrast, reflects improving migration patterns, continued withdrawal of investors since the mining boom, and less exposure to industries heavily affected by the COVID epidemic -19.
Top suburbs:
leumeah
,
East Victoria Park
,
sth toowoomba
,
Whyalla
,
berala
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