Rents nosedive after mass tenant exodus
Landlords in some of Sydney's most sought after inner suburbs have been offering apartments with hundreds of dollars slashed off the weekly rents as COVID-19 evaporates the tenant pool.
New research showed average advertised rents are currently more than 10 per cent cheaper than they were a year ago in Pyrmont, Potts Point, Chippendale-Darlington and Bondi Junction.
There was a similar trend in the Sydney CBD, where units were being listed for 14 per cent cheaper than a year ago, on average.
Smaller average falls of about 8-9 per cent were recorded in Surry Hills, Redfern and in the Waterloo-Zetland area, the SQM Research figures showed.
The reduced unit rents followed a mass exodus of tenants from Sydney rental properties, which pushed vacancies to a near record high.
Close to 29,000 properties were vacant at the end of April, representing nearly 4 per cent of all rental stock.
It was a rise from about 21,500 vacancies in March - a vacancy rate of about 3 per cent.
But the new vacancies were heavily concentrated in high density areas, including the Sydney CBD, where 13.8 per cent, or nearly one in seven, rental homes were empty.
CBD properties advertised at significantly reduced rent included a one-bedroom unit on Kent St available for $595 per week, a reduction from the previous rent of $700.
In Surry Hills, a four-bedroom house on Campbell St was rented out for $1150 per week in July last year, but rent was advertised in May this year at $950, a reduction of $200.
A three-bedroom house in nearby Fitzroy St was listed at $1025 per week in 2018 but this month the rent was relisted for $175 lower at $850 per week.
In Potts Point, a two-bedroom unit in a building at 6 Macleay St was listed for rent last week at $700 per week, down from $850 in 2018, CoreLogic records showed.
SQM Research analyst Louis Christopher said landlords were competing for fewer tenants and rents could plummet further if more rentals emptied out.
Tenant demand was weakening due to rising unemployment and a drop in international students, Mr Christopher said.
Properties rented out on short-term rental sites were also being converted to long-term rentals, increasing the supply of available housing, he said.
This was evident in the popular holiday rental suburb of Palm Beach, where about 16.1 per cent of rental housing was vacant.
Real Estate Institute of NSW chief executive Tim McKibbin said landlords were facing additional strain from the NSW government's moratorium on rental evictions.
The measures include a 60 day stop on landlords issuing termination notices or eviction orders to tenants unable to pay rent due to COVID-19-induced financial difficulties.
The government has also encouraged landlords to negotiate rent reductions with tenants in "good faith".
Landlords will only be able to give a termination notice or apply for an eviction order after the interim 60-day stop if considered "fair and reasonable", according to Fair Trading guidelines.
Mr McKibbin said government was expecting landlords to shoulder an unfair burden.
"Landlords have not been insulated from COVID-19," he said.
"The NSW Government's tenant protections completely ignore landlords, taking away their ability to derive critical income and removing control over an asset that they've worked hard to acquire."
Bank offers to defer mortgage repayments, often termed "mortgage holidays", would not solve the issue for landlords as they would have to pay increased interest down the line, Mr McKibbin said.
Continued rises in vacancies would have a devastating impact on the economy, according to Mr Christopher.
There would be sharp falls in building approvals, which would increase the risk of a "major depression in our residential construction sector" and create "rather obvious risks for housing prices", he said.
Originally published as Rents nosedive after mass tenant exodus