Short-term rentals and rising unemployment push vacancy rates higher

first_imgRental vacancy rates are rising.Rental market vacancy rates rose last month, hitting properties in inner-city areas and holiday localities hardest.According to SQM Research, a market analyst, the national rental vacancy rate recorded a large jump from 2 per cent in March to 2.6 per cent in April.In Brisbane, vacancies rose from 2.1 per cent in March to 2.8 per cent in April, with the total number of vacancies reaching 9,555, up from 7,299. Property analysts say rising unemployment combined with a drop-off in international students and overseas migrants in the wake of COVID-19 restrictions have contributed to the rise.The shutdown of Australia’s tourism industry has led to a surge of short-term holiday rentals onto the long-term rental market, also impacting vacancy rates. However, economists maintain the rental market is strong enough to withstand short-term fluctuations. Economic stimulus combined with an easing of restrictions will also allow Queenslanders to book overnight accommodation from June 12, which will help to keep the rental market stable. Real Estate Institute of Queensland CEO Antonia Mercorella said there was more movement in areas reliant on tourism lettings.Year-on-year an upward trend on vacancy rates continues, with the national average coming in 3 per cent higher in April than at the same time last year.Louis Christopher, the managing director at SQM Research, said the one-month jump as one of the largest rises ever recorded. “The blowout in rental vacancy rates for the major CBDs suggests a mass exodus of tenants occurred over the course of March and April. This may be attributed to the significant loss in employment in these areas plus the drop-off in international students.” Real Estate Institute of Queensland director Antonia Mercorella said Brisbane’s rental market was in a fairly healthy state but some regional areas were hurting more than others. “Beyond Brisbane there has been movement within those regions more dependent on tourism letting, such as the Gold Coast and Noosa, where vacancy rates have had a more pronounced increase,” Ms Mercorella said. “This was to be expected with short-term rentals shifting onto the long-term rental market, creating higher rental inventory.”Meanwhile, Simon Pressley, the head of research at Propertyology, a market analyst, said landlords were suffering in areas of Brisbane reliant on student accommodation and tourism. More from newsParks and wildlife the new lust-haves post coronavirus9 hours agoNoosa’s best beachfront penthouse is about to hit the market9 hours agoPRD Realty chief economist Asti Mardiasmo says a resilient market should see it through the fluctuations.Mr Christopher said that if the trend for vacancy rate rises continued, a drop in asking rents could follow, which was good news for tenants, but not for landlords.National combined rents are recording a 12 month decrease of 3.1 per cent. The average rental asking price on a house in Brisbane this week is down by 0.2 per cent on the same time last year, however, asking prices for units are up 1 per cent.While some anticipate this will lead to a mass exodus of investors from the market, Ms Mercorella said there were little signs of it at present.“The Brisbane market isn’t showing any indications of properties hitting the market en masse, particularly rental properties. While individual investor’s circumstances may see some making the decision to sell based on their financial and/or personal circumstances, with the market exhibiting relative stability as we navigate this pandemic, we anticipate a stable rental sector.”PRD Realty chief economist, Dr Asti Mardiasmo, said the rental market’s strength pre-COVID-19 would help it withstand the current short-term fluctuations, but areas reliant on tourism and education would feel the impact more strongly.last_img

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