Shifting Conditions Creates Greater Demand for Melbourne’s Inner-City Properties
Since our national borders closed due to the pandemic in March 2020, the rental markets in inner-city areas across the nation found themselves in a state of hibernation. Now that vaccination rates are surpassing the 80% targets set by the government for those aged 16 years and over, borders have reopened, and Australia is set to welcome a veritable flood of international renters in need of accommodation – and it is expected to place a surging demand on the Melbourne property market.
Working from home mandates being removed, coupled with the lowest unemployment rate in more than 13 years, has encouraged many young locals who moved back into the family home during the height of the pandemic, to return to inner-city living. And, as outlined in an article published on REA, the changing conditions are already creating increased competition.
The desire for locals and international renters to secure a rental property in recent weeks has seen Melbourne real estate agents report that pre-pandemic levels of interest and activity are returning, with property managers rushing between appointments to keep up with demand.
As more overseas renters return to Australian shores, it is safe to assume that further positive change in inner-city market conditions will follow.
Melbourne Vacancy Rates Declining
In Melbourne, vacancy rates dropped 0.8 percentage points in January to 2.4 per cent, which saw rates back to levels lower than April 2020. Similarly, rental listings have also fallen by a staggering 23.1 per cent compared to December, with just under 12,500 vacant rentals at the end of January. Melbourne’s CBD also recorded the largest monthly decline in vacancy rates across the nation.
The improving rental market in Melbourne continues with Domain’s rent report for December showing record house rents, up 3.5 per cent over the quarter with unit rents up 1.4 per cent quarter-on-quarter.
Basic economics outlines that when demand begins to outweigh supply, prices naturally start to rise, which is welcomed news for existing landlords and investors looking for a new rental property to add to their portfolio, as now may be the time to join the market to take advantage of the growing income-earning potential.
Apartment buildings are already starting to recover well from the growing confidence afforded by the vaccinations. It is therefore advised that those in search of a new home do their homework and evaluate what is available on the market. It is also important for rental seekers to have all documentation ready to go for when that ideal rental does pop up. The adage of, ‘Strike while the iron is hot’, certainly rings true in a market such as this.
The pent-up demand for properties at a time of increasing consumer confidence, combined with an improving economy and the return of international renters, ensures Melbourne’s property market is set for strong growth and increased demand in 2022, and that’s welcome news to investors looking to add to their portfolio.