Border reopening good news for some but could tighten rental market

Australia’s international border has reopened and a leading buyers’ agent says that spells good news for landlords hit hard by the mass Covid exodus two years ago.

Michelle May, of Michelle May Buyers Agents, said investors in the inner city and suburbs such as Waterloo, Rosebery and Mascot were eagerly awaiting the border reopening to boost demand for their properties.

“In the international student market, they all left in a hurry and they’re all going to be coming back with a vengeance,” she said.

“I think investors are really going to be pouncing on that, particularly in those areas that haven’t been performing well both rental and sale wise.

“So the inner city areas, as well as Waterloo and suburbs like that, had a lot of high density newer apartments that were attracting a lot of those types of tenants and owner-occupiers.

“International skilled labourers are also going to be coming in and need somewhere to rent.”

At the opposite end of the spectrum, Ms May said suburbs in Sydney’s Inner West had a tight rental market that could get tighter as a result of more people coming into the country.

“Rental properties, particularly houses, are not sitting on the market very long at all,” she said.

“In some cases they’re renting for even more money than the management agencies are asking for.

“If there’s more competition coming in from international areas that’s only going to put more pressure on the market.”

Ms May noted Newtown was one of the Inner West’s most popular suburbs with families due to the Newtown High School of the Performing Arts.

“There will always be an underlying demand for families moving into that area because they want their kids in that high school,” she said.

Adding further complexity to the Sydney rental market was a contingent of buyers who had wanted to buy in the past two years but hadn’t done so, Ms May said.

“There’s a lot of buyers who have been hurt a lot over the last 18 months because they haven’t been successful (in buying),” she explained.

“They’re going to have to continue renting longer than they wanted to because they can’t buy what they want – they’ve been priced out.

“They’ve been priced out of making that upgrade whether it was from a two-bed apartment to Torrens title or a three-bedroom apartment or a townhouse. So they’re forced to stay renting.

“There’s lots of different pressure points everywhere. There’s all these different micro markets.”

On the issue of housing affordability, tight rental markets and rising rental rates, Ms May suggested a lot could be learnt from European cities, such as the UK and the Netherlands, where the government owned a larger percentage of rental stock.

“Here, a very high proportion is privately owned and the government only owns a small portion of the market,” Ms May said.

“It doesn’t give tenants a lot of security at all.

“There’s a huge rental market in the Netherlands, where I’m from, and it’s all rent controlled and it’s predominantly owned by the government, and so the tenants are secure.

“They can stay in the same place for 10, 20 and 30 years, safe in the knowledge that they’re not going to get booted out and they’re going to be looked after.”

Ms May said with COVID-19 prompting Sydney-siders to leave the big city for a tree change, regional areas were also experiencing tight rental market conditions. 

“It’s driving up the prices and pushing out the locals,” she said.

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Kylie Dulhunty

Kylie Dulhunty is the Deputy Editor at Elite Agent.