Damage inflicted by the COVID-19 outbreak has undoubtedly affected the residential rental market in Melbourne CBD, with rent prices having dropped 21% compared to this time last year due to a surge in vacancy rates.
Rising unemployment and reduced population growth as a result of the border closures (interstate and internationally), has constrained demand across the market. With many renters rushing to lower their living costs amid the pandemic, the percentage of existing listings for rental properties climbed from 48% in May 2019 to 70% in May 2020. This indicates that properties are currently spending extended periods of time on the market, and with more new listings entering the market, the supply will continue to increase in coming months.
May 2020 saw only 12 properties leased out of 100 listings available for rent, approximately half of the amount leased this time last year. Furthermore, we have seen a 286% increase in total listings for the month of May 2020 - 4 times that of May 2019. Victoria is heavily reliant on population growth, international students and tourists however a renewed COVID-19 outbreak has seen a collapse in these sectors, resulting in significantly high rental vacancy rates in the CBD and surrounding areas.
Federal and State laws surrounding restrictions create a great deal of uncertainty, weighing heavily on the Melbourne rental market. We are hoping in time the market will stabilise and not decline, however sadly it will not be a marketplace to increase rents.
Renters are encouraged to work with their landlords and vice-versa to keep ongoing tenancies active.
At Ironfish Real Estate, we're committed to providing proactive advice to help our landlords get the most from their investment property. Whether you already engage in our services or are on the lookout for a property manager, we encourage you to get in touch with one of our agents for more information.