The property market changes every single day, from rental prices to high-demand suburbs, so you can only imagine how much has changed in the last month! The current market across Australia has been heavily influenced by the pandemic and its unavoidable consequences. At the time of writing this market update, most of our major cities are in lockdown trying to slow the spread of the virus. This situation has resulted in changing lifestyle choices, locations worth relocating to, and of course, rental property prices.
In this market update, we’ll take a look at how COVID is impacting the market along the east coast of Australia, how low interest rates have been impacted in QLD and the strategies we’ve taken here at :Different to lease our owners’ properties in VIC & NSW while in lockdown.
Let’s dive right in.
How is COVID impacting the market?
With both VIC and NSW in extended lockdowns, the market in Brisbane and South East QLD has seen a significant shift over the last month, with people unable to relocate interstate.
In August, we saw a slight decline in inquiries of our $700+ per week listings, which is a trend that aligns with restrictions on interstate travel. This is because we typically find the inquiry on the properties at those price points are more commonly from interstate tenants than they are locally acquired. More recently, we’ve seen Brisbane and South East QLD become popular relocation destinations (especially for people from other states). One reason for this is the growing rents and cost of living in other regions, as well as tenants securing a renewal of their existing agreements so they don’t have to fight the “look for a new home” battle.
The pandemic has made things more complicated than before. In July, we saw an increase in cancellations of our open homes in NSW, QLD and VIC in line with the restrictions, but adversity breeds innovation. At :Different, we have been working hard behind the scenes to organise and produce virtual walkthroughs of our property listings. This means that prospective tenants can choose to inspect a :Different property from the comfort of their own couch... even if we're in lockdown.
In July, our virtual walkthroughs were viewed 94 times on average, with an average of 78 unique viewers (meaning that there are 78 people virtually inspecting your property)! You can have a look at our virtual walkthroughs here.
It’s getting hotter in our Sunshine State
Tenants in Brisbane are now forking out the highest median house rents in the city’s history after prices climbed 12.5% over the course of 2020 to reach a record-shattering $450 per week. The average rent in Brisbane is $400 per week, which puts the River City on top of the pecking order of the most expensive Australian cities to rent in, followed by Melbourne, Sydney & Canberra.
Properties in the $600 and less per week bracket are leasing like hotcakes, especially in the Greater Brisbane neighbourhoods. Suburbs such as Alderley, Newmarket, Paddington and Ascot, to name a few, are in high demand, especially for families. This is mostly thanks to the fact that they are conveniently located to schools, great shopping strips, amenities, shops, parks, beaches and much more.
Why the shift? The pandemic has realigned our understanding of what we want from our homes – the ability to work, live and play, all within 20 minutes of the city, is becoming an increasingly desirable lifestyle. This new lifestyle is what is driving rent prices upwards, and with employers now offering flexible working arrangements, the CBD and Inner City apartment living is becoming less attractive in the face of spacious homes and the conveniences of suburban living.
How low interest rates have been impacted in QLD
Interestingly, buying a home is now more affordable than ever before. Low interest rates and Corelogic stats indicate that home value in Brisbane has grown by 6.2% over the last quarter and 14.8% over the last year.
This increase in home value is reflected in more and more tenants opting to buy their first home, especially in neighbourhoods where having a mortgage is cheaper than paying rent.
Renters in NSW took advantage of remote working in a big way in 2020 with many shifting to regional and coastal suburbs, and new analysis shows the trend is continuing in 2021, according to the REA.
Property and Pandemic in NSW: How is COVID impacting the market?
The current outbreak in NSW has allowed tenants and owners alike to relocate to new homes. With falling rental prices and investment properties prices, people are moving (or at least considering a move) for financial benefits followed by a change in lifestyle, with 43,000 Aussies moving to regional towns from cities.
That said, compared to owners, we are seeing minimal movement by tenants, with many weighing their options and negotiating lease renewals. The lockdown has had a significant impact on the property market, especially on renters who are financially affected by coronavirus. However, what’s interesting to note is that whilst the lockdown has created uncertainty in the marketplace, we are still seeing short-term lease properties (such as AirBnbs and student housing) becoming available.
:Different are leasing properties with an average of 16.5 days on the market, compared to the average in the under 30 days on market for Sydney, which is currently 43 days (as of July). The current vacancy rate is 3.1 %, whereas this time last year it was 16.2% (see REINSW Vacancy rates).
The impact of COVID on property in VIC
The trend of moving further away from the CBD and Inner City is consistent across the big cities of Australia. In Melbourne, the city centre is seeing cascading rental figures, with lockdowns and changing lifestyle preferences. Interestingly, this has led to an increase in rental figures in regional neighbourhoods, an ever-growing transition since last year. This impact on the market is elevated by the lack of international students who contribute immensely to the Education State. Corelogic reports an increase of 36.2% of rental listings in Melbourne’s Inner City, highlighting the widening cracks in the property market due to COVID-19.
Our approach in VIC is similar to our strategy in NSW. Lockdowns and restrictions mean that our use of digital platforms, videography and private 1:1 inspections has allowed us to reach potential tenants in the comfort of their homes.
The current vacancy rate in Melbourne is 3.5%, whereas this time last year it was 3%. There are currently 21,992 properties being advertised online, whereas this time last year there were 18,346.
July at a glance: Last month, the :Different Leasing Team leased 60 properties, registered on average 94 views (and 78 unique viewers) for virtual walkthroughs, and averaged 16.5 days on the market for each property.
Disclaimer: The views, information, or opinions expressed in this blog post are for general information purposes only and should not be relied upon. We have not taken into account specific situations, facts or circumstances, and no part of this blog post constitutes personal financial, legal, or tax advice to you. You should seek tax advice from your accountant, specific to your situation.