Rental vacancies appear to be stabilising as a large number of investors are selling their inner-city apartments to take advantage of rising prices. This has resulted in fewer rentals being available for those looking for rental accommodation close to the CBD.
With the loss of international students in 2020, many inner-city apartments, especially those close to universities, were left vacant. This in turn caused rental prices to drop and left many investors without regular income to pay off their investment properties.
Rental prices starting to rise again
The reduction in vacancies is starting to drive rental prices up as supply has trouble keeping up with demand. For example, in the inner-west suburb of Leichhardt, one in three (34%) properties for sale are ex-rental homes and apartments.
This is the highest proportion of rental properties currently up for sale in any given area. Data from Suburbtrends.com shows that vacancies are currently sitting at 3.7% with a median rental return of $750 per week for a house and $500 per week for a unit.
Airbnb and Stayz rentals trending back to short-term rental properties
When the demand for short-term holidays rentals declined due to the lack of international tourists, many property owners who used accommodation platforms like Airbnb or Stayz flipped to long-term rentals. This trend is now reversing as these investors return their properties to the short-term rental market.
This is mostly down to a strong trend of people holidaying in Australia instead of travelling overseas. Due to the rise in property prices, there is also a significant portion of Airbnb or other short-term rental properties for sale.
Decline in vacancies likely to continue
The demand for owner-occupier properties is still not keeping up with the supply. It’s still a seller’s market and many investors continue to offload their rental properties.
This is good news for landlords as it means that the available vacancies will tighten even further and as the pandemic eases, you’ll be able to increase rental prices. If current trends continue, this could cause a shortage of available rental properties similar to what is happening in other parts of the country, especially in rural areas.
In some areas around the country, the demand for rental properties is far greater than what is available. This has seen many prospective tenants vying for the same property. Vacant rentals are receiving multiple individual applications; there has even been a trend of prospective tenants offering more rent than what is being asked originally.
If you own an investment property in and around the city, it’s a good idea to hold onto it if you can. Even if your property has been vacant for any period, it won’t remain so for long. As students and international visitors return and push up demand, vacant rental properties will be snapped up by prospective tenants as soon as they become available.
Can we help with managing your Sydney investment property?
Get in touch with one of our experienced property managers to discuss the current trends in the market and consider what your options are. Our property managers are well versed in the local market and can give you some solid advice regarding your investment property.
Free Property Management Advice, talk to an expert now!
Are you a landlord looking for advice? Do you have questions about these uncertain times? Changes to the rental market or anything specific to Property Management? Book a one-on-one, obligation-free, consultation with Jaime Pratt, Head of Property Management at Vogue Property Managers.
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https://vogueproperty.com.au/team/jaime-pratt
With over 20 years of property management experience, Jaime will openly provide advice on improving rental return, enhancing your property, attracting quality tenants and finding ways to alleviate your expenses.
