Melbourne and Sydney unit rents still down but SQM detects shift back from the regions

Reflecting rental accommodation oversupply, Melbourne and Sydney unit rents fell by 1.4% and 0.4%, respectively.

Over the year, Melbourne and Sydney unit rents are down substantially by 12% and 6.5%, according to the March SQM data.

Melbourne house rents fell by 0.5% over the month and by 6.1% over the year to 12th April.

In Sydney, house rents rose by 0.9% from a year ago.

Elsewhere, house rents rose in Adelaide, Perth and Brisbane by more than 2% over the month to 12th April, while unit rents also rose.

"Over the year, rents have shown strong growth in the smaller cities, by as high as 25.5% for houses and 11.1% for units in Darwin," the boss of SQM Louis Christopher advised.

Nationally, house rents rose by 14.7% while unit rents rose 6.5%, pushed up by strong growth in regional locations around Australia.

"Vacancy rates remain very tight in Australia’s cities excluding Sydney and Melbourne and this is creating a surge in rents in Perth, Adelaide and Brisbane," he said.

“However, vacancy rates for Melbourne and Sydney remain elevated.

"The loss of international student tenants due to COVID-19 has hit both cities hard and the ongoing high rate of dwelling completions keeps these rental markets in surplus.

"That said we are seeing increasing signs that the absolute worse for CBD landlords has passed.

“The Melbourne CBD vacancy rate now stands at 8.3%, while the Sydney CBD vacancy rate was 6.2% in March 2021.

"While they are obviously still elevated, those figures are down from the double digits last year and fell again for the month of March.

“Meanwhile vacancy rates rose in the Blue Mountains, North Coast NSW, Mornington Peninsula rose for the month.

"It may be a signal we are seeing a return of the some of the population back to the inner cities,” Christopher said.