National rents have fallen by half a per cent over the June quarter. New figures from CoreLogic’s Quarterly Rental Review show that, although COVID-19 was a significant factor in the drop, the rental market was already weak.
Rent values dropped 0.3 per cent in the month of June, and 0.5 per cent over the entire quarter, the largest quarterly fall since September 2018.
Capital city rents fell 0.7 per cent, while regional rents rose 0.2 per cent.
Hobart suffered the biggest rent falls of the capital cities, with a drop of 2.3 per cent over the quarter, followed by Sydney at 1.3 per cent.
“The decline in rent values over the quarter came at a time when the rental market was already relatively weak,” Eliza Owen, Head of Research Australia at CoreLogic explains.
“Annualised growth in national rent values was just 1.1 per cent in the five years to June 2020, compared with annualised growth in the selected living cost index of 1.4 per cent in the five years to March for employee households.
“In other words, rents have generally seen softer growth than the growth in general cost of living for most households.
“Prior to the fall in rent values over the June quarter, growth in rents had seen some momentum building, with the national CoreLogic rental index recording consecutive increases between September 2019 and March 2020.
“These signs of rebounding rent values came as investor participation in the market was falling from 2017, and subsequently, the rate of new supply additions in rental properties had been falling.
“However, the COVID-19 environment shifted this trajectory. Closed international boarders created a significant shock to rental demand, as historically the majority of new migrants to Australia have been renters.
“Furthermore, job losses in sectors such as hospitality, tourism and the arts, which ABS payroll data estimates has been around 20 per cent, have also impacted demand, because households in these sectors are more likely to rent than in other industries,” Ms Owen said.
Rental vacancy rates dropped nationally in June, down from both the previous month, and those of June, 2019.