It may not quite have been ‘Freedom Day’, but the toughest COVID restrictions ended for Sydney on 11 October and Melbourne on 23 October. With it came a burst of activity for the property market, with a surge of new listings both for leases and sales. For real estate agents and property managers, it brought the ability to show homes more easily to prospective tenants and buyers, as well as to hold physical auctions. These interactions with tenants and buyers have been something we usually take for granted.
Since the COVID-19 pandemic first struck in early 2020, it has been reshaping Australia’s rental markets. Apartments in many parts of the traditionally reliable inner-city areas of Sydney and Melbourne have tended to struggle, while demand for suburban family homes and properties in many lifestyle locations has soared. Two of the biggest beneficiaries of the trend have been Perth and South-East Queensland, where property prices are growing and yields now stand around, or even over, 4% according to CoreLogic data.
The South East Queensland market is so busy that one new landlord who recently approached us to manage his Ormeau property found that he received no fewer than nine rental applications at his first viewing. Meanwhile, in Perth, the media is reporting on a ‘rental crisis’ with the average rent rising to a record high across the city, at the same time as property prices record strong growth.
We expect property investors to be increasingly attracted to both areas, especially with WA’s economy looking strong and Brisbane embarking on an infrastructure building spree ahead of the 2032 Olympics.
However, despite the relative sluggishness of the inner city Sydney and Melbourne markets, we also believe this is a good time to invest in these cities too. In both cities, apartments have not experienced the same rapid price growth as houses, especially in areas close to the city.
With lockdowns ending and borders re-opening, we anticipate that one of the real drivers of demand in inner metro areas - recent arrivals, including overseas students - will start to enter the rental market once more. They are likely to be joined by young professionals, and even downsizers, who want to be close to the action as the cities reopen.
As this happens, the rental market should tighten, rents should eventually rise, and we may even begin to see prices rise more rapidly too. For that reason, our advice is that despite the soft rental markets in inner-city Melbourne and Sydney, now could be the best time to expand your property portfolio in these areas, especially if you’re looking to the long-term. For tenants, now is also the perfect time to move - before more competition for properties arrives.