Melbourne's ongoing rental strife will lead to falling rents: Pete Wargent
EXPERT INSIGHT
This is largely conjecture, but as Sydney's rental market is steadily righting itself, Melbourne's inner city unit market may need to see rents falling by 50 per cent to fill up the empty units left in the wake of the repeated border closures and lockdowns.
New South Wales is taking three times as many arrivals as Victoria through quarantine, which may be a part of the equation.
But just as pertinently the on again/off again closures and snap lockdowns will likely see thousands averting Victoria and heading to sunny south-east Queensland instead (and who can blame them?), especially as employers have become more open to the work from home phenomenon.
To be sure this is a rough and ready thesis, but I've seen parts of Noosa Shire with effectively zero rental vacancies lately, and without looking into it too deeply I wouldn't mind a bet that Gold Coast is heading in a similar direction.
A quick straw poll search of realestate.com.au for rental advertisements by Central Business District postcode shows:
- Hobart TAS 7000 - 31 results
- Perth WA 6000 - 177 results
- Brisbane QLD 4000 - 384 results
- Sydney NSW 2000 - 437 results
- Adelaide SA 5000 - 487 results
- Melbourne VIC 3000 - 3,974 results
Granted this is lazy and half-baked analysis, but I also reckon it's pretty much indicative of the reality.
If you include the city and its surrounding suburbs Melbourne blows out to 12,708 results, versus 2,309 for Sydney CBD and fringe, and 1,957 for Brisbane.
That can only mean falling rents for Melbourne CBD and its immediate surrounds.
A potential 50 per cent drop in rents is far from hyperbole: the 12-month change in asking rents for units in the Melbourne 3000 postcode is -33.3 per cent, according to SQM Research data.
For units in Docklands in Melbourne the 12-month change is -31.4 per cent.
Melbourne's loss is Queensland's gain.