A “surprise” improvement in Melbourne’s rental vacancy rate is a silver lining for the languishing property market.
Some properties that had been sitting empty during the pandemic were finally filled in June, according to SQM Research data.
Greater Melbourne’s vacancy rate decreased 0.1 per cent between May and June to 3.1 per cent, reducing the number of empty rental properties from 18,499 to 18,116.
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Vacancy rates improved in Melbourne during June.
The small improvement is a far better result than those recorded in April and May, when vacancy rates worsened by 0.9 per cent and 0.4 per cent respectively.
SQM Research director Louis Christopher said there were unexpected improvements in the CBD and Southbank, where vacancy rates recently hit heights not seen for more than 15 years.
They fell from 9.3 per cent to 8.8 per cent in the city, and 16.8 per cent to 16.2 per cent in Southbank.
“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,” Mr Christopher said.
“The fall in rents over the same period for a number of our capital cities suggests that the weakness in the rental market remains.”
Oliver Mullaney, Riley Mayne and Damien Lee moved into a Hawthorn East apartment during coronavirus. Picture: Rob Leeson.
Collings Real Estate head of property management Caleb Pikoulas said June had been a strong month for rentals, but market concerns were mounting again amid a second lockdown.
“June kind of felt normal again and it was a lot better than this month (July),” Mr Pikoulas said.
“I think it’s because we had already done a lot of the hard work, like making price reductions, and tenants were out looking again.”
158 Station Street, Fairfield has attracted plenty of attention on the rental market.
He said the inner north agency leased out 22 properties in June, which was more than double what they filled in May.
But Melbourne’s second lockdown in July was the start of another market slowdown: “We can’t get as many people through the door now and people are holding off leasing their properties.
“I’ve marked September as when things may return to normal, although that seems like a long way away right now.”
Harcourts Melbourne City director Dionne Wilson said short-stay accommodation had flooded the inner-city rental market in March. A drop in international students had also caused the spike in vacancy rates.
She said June has delivered “very promising numbers” and property managers were chasing “every single lead” to try and fill properties.
“Across the board the city is a little harder hit, while some parts of Melbourne remain relatively unaffected,” Ms Wilson said.
Melbourne’s CBD vacancy rates have been hardest hit during the pandemic. Picture: Michael Dodge
International students and young people have moved out of their city rentals. Picture: iStock
Melbourne’s east, north, southeast, southwest, west and bayside all showed vacancy rate improvements in June, according to the research. The inner east and northwest slightly worsened.
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