Vacancy Rates Decreased in June
by Louis Christopher, CEO
SQM Research today has revealed the national residential rental vacancy rate recorded a decrease over the month from 2.5% in May to 2.2% in June 2020. The financial year ended with the total number of vacancies Australia-wide now at 77,132 vacant residential properties. This time last year, the national vacancy rate was slightly higher at 2.3%.
All capital cities recorded declines in vacancy rates over the month. Sydney currently has the highest vacancy rate in the nation at 3.8%, having declined by 0.2%, followed by Melbourne with a vacancy rate of 3.0%, declining by 0.1%. Hobart’s vacancy rate is the lowest in the nation at 0.9%, having declined by 0.4% over the month.
Darwin recorded the largest decline in rental vacancy rate of 0.5% to now record a low vacancy rate of 1.8%.
Even among the capital city CBD locations, there have been declines in vacancy rates over the month. Sydney CBD has dropped to 13.8%, down from 16.2% in May, Melbourne’s CBD and Melbourne Southbank have also declined to 8.8% and 16.2% respectively. Adelaide CBD has dropped to 7.1% and Perth CBD is now 5.3%.
However, Brisbane CBD’s vacancy rate has increased from 13.3% in May to 14.0% and Sydney’s Palm Beach is now 18.0%, up from 16.7% in May.
Over the month, Capital City asking rents decreased 3.1% for houses and 4.5% for units for the week ending 12 July 2020 to record asking rents of $534 per week for houses and $421 per week for units.
Sydney, Melbourne and Adelaide recorded declines in asking rents for both houses and units over the month. Whilst Brisbane and Perth continue to record increases in house and unit asking rents. Canberra and Darwin have had declines in house asking rents but recorded increases in unit asking rents.
We believe the surprise fall in vacancy rates is due to Airbnb property owners giving up on the longer term leasing market and moving back to short term leasing, especially in light of the July school holiday period and the opening of some state borders.
The fall in rents over the same period for a numbers of our capital cities suggests that the weakness in the rental market remains.
Going forward, our expectation is the Australian rental market will remain weak for the duration of 2020 or until such time as the international border reopens and we as a community have past the worst of COVID19.
AUCTION LISTINGS* for week ending 19 July 2020
*Note: The above counts of auctions represent most recent known auction dates for the coming week. As at 8 July, Melbourne auctions are back on-line.
AUCTION RESULTS for week ending 12 July 2020
Full individual auction results can be found on our website:
DISTRESSED PROPERTY OF THE WEEK
501 / 243 Pyrmont Street, Pyrmont NSW 2009
This 2-bedroom, 2-bathroom apartment is currently listed for sale with an asking price of $849,000 in Pyrmont, 2km west of Sydney’s CBD. The apartment was first advertised for sale in June 2019 and was last sold for $412,000 in October 2004.
The apartment has a spacious 106sqm layout featuring a split-level design located on the 4th and 5th levels and enjoys a sunny and bright easterly aspect with extra high ceilings, polished timber floors and timber features throughout, adding to the charm and character of this residence.
This stylish apartment offers low maintenance city living and is in a prime location, close to the light rail, restaurants, bars and theatres, Star Casino complex, Sydney Fish Market, Sydney Convention Centre and the Darling Harbour precinct.
The apartment is in the landmark 'Goldsbrough Mort' complex, an impressive historic building built in c1893 and retains the industrial character and elegance of the late 19th century. Facilities include 25m pool, spa, sauna, gym and 24-hour concierge plus full security throughout the building. Current Strata rate is approx. $2,500 per quarter.
Apartments in this postcode have a current price range from $790k to $1.07m. As a comparison, apartment 532 in this complex sold for $880k in March 2020. Over the last month, asking prices for apartments have had a 7.5% increase.
The percentage of renters in this area is high at 62.57% (ABS 2016 Census) and unfortunately, this area’s Vacancy rates has increased from 3.3% in March to a high 9.2% in June. This area, along with the Sydney CBD has experienced one of the largest residential vacancy rate increases due to a mass exodus of tenants in the past few months due to loss of employment in CBD areas and a drop-off in international students due to the Covid-19 pandemic. As a result, asking rents have declined by 2.6% over the month. This postcode still offers a good gross rental yield of 4.2% for units.
Previously this area presented good investment opportunities for investors and has attracted overseas renters however, in the current climate, this apartment would be better suited to owner-occupiers seeking a lifestyle of convenience and the excitement of city life.
Keep monitoring this market’s growth with SQM Research’s free property data. Also consider the SQM Property Explorer product for more in-depth data and property price estimator.
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