Melbourne’s north-west has weathered the worst of a coronavirus-driven rental market downturn.
Five and a half thousand more rental homes were vacant across greater Melbourne at the end of April compared to a month earlier, SQM Research figures show, with the inner-city market notably impacted amid the pandemic lockdown.
Employment loss, the departure of international migrants and students, and Airbnb properties hitting the long-term rental market all contributed to the increased supply of rental homes in the inner city, outweighing demand from tenants.
But the Moonee Valley, Moreland and Hume municipalities have only marginally felt the blow – and experts say the worst has now passed for the rental sector.
Brad Teal Rental Department Manager Prue Bryant says despite there being no shortage of rental stock on the market in these areas, certain properties have been leasing with ease.
“There is an oversupply of apartments. But three- and four-bedroom family homes are being snapped up,” she says.
“We’ve had strong months, leasing above average while withstanding difficult conditions.”
Pascoe Vale’s vacancy rate only rose marginally, from 1.6 per cent in March to 1.9 per cent in April, and Essendon’s, from 2.1 per cent to 2.4 per cent, according to research firm Propertyology.
Both these figures are below Melbourne’s average of 2.8 per cent.
And the rises are small when compared to Southbank’s leap from a 5.5 per cent vacancy rate to 13 per cent in just one month.
Docklands and the CBD have also become renter’s markets, with vacancy increases from 4.4 per cent to 9.1 per cent and 5 per cent to 7.6 per cent respectively.
The figure is calculated by comparing how many rental listings have been advertised online with the total number of established rental properties in a region.
Propertyology head of research Simon Pressley says the scarcity of high-density apartment areas in the north-west is a major factor keeping its rental market in better shape than those inner-city suburbs.
And he says the “doom and gloom” that’s shrouded Melbourne’s rental sector due to COVID-19 is fading.
“Whatever the vacancy rates were at the end of May will mostly be the worst of it,” he says.
“People would have made their move out of their rentals in the initial stages of isolation, so we are at the other end now and the market will improve as mobility improves.
“Plus, people can start thinking about holidays now as restrictions ease, so Airbnb properties will be relisted to help that rebound.
“We are heading in the right direction.”
Ms Bryant suggests financially-secure buyers looking to start or expand their investment portfolios to consider doing so now, especially with the Reserve Bank of Australia setting the cash rate to an historic-low of 0.25 per cent.
Savvy investors might consider buying a house that will give a good rental return with good capital growth in areas like
Pascoe Vale, Glenroy and Hadfield, where family homes are in demand,” she says.
The latest realestate.com.au data shows units in Moonee Ponds and Sunbury are enjoying the highest gross rental yields in Melbourne’s northwest, of 4.61 per cent and 4.44 per cent respectively.
For houses, Meadow Heights (4.76 per cent), Broadmeadows (4.87 per cent) and Craigieburn (4.9 per cent) were the top performers.
By comparison, greater Melbourne’s gross rental yield is 2.8 per cent for houses and 3.9 per cent for units.
During the height of the COVID-19 lockdown, the Victorian Government introduced a $500 million rental relief package to support tenants and landlords facing financial hardship.
Forming part of the COVID-19 Omnibus (Emergency Measures) Act 2020, the package includes six-month moratoriums on evictions and rent rises, rental assistance for struggling tenants, and land tax relief for landlords who agree to reduce rents.
More than 11,390 rent reduction agreements had been registered with Consumer Affairs Victoria as of May 25.
Ms Bryant says Brad Teal is supporting landlords and tenants alike through the tough time.
“We’ve been able to manage tenant reduction requests effectively, while ensuring landlords aren’t placed in financial hardship themselves,” she says.
The agency adopted a reverse approach to leasing properties during earlier stages of the pandemic, with client managers and landlords reviewing applications from prospective tenants before allowing them to physically inspect homes.
“Even in an evolving regulatory environment, we are still able to adjust to the new working conditions and carefully navigate the requirements,” she says.