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Canberra leapfrogs Sydney for most expensive rent

14 January 2021 Bianca Dabu
Canberra leapfrogs Sydney for most expensive rent

While some rental markets have felt the wrath of COVID-19, others are thriving.

New data from SQM Research has shown that Canberra now has the highest asking rent for houses at $656.70, followed by Sydney at $632.90 and Darwin at $603.40.

It’s a similar story for unit asking rents, with Canberra also boasting the highest price at $473.4, followed by Sydney at $444.4.

Over the month of December, Canberra house rents increased by 1.4 per cent, while unit rents declined by 0.7 of a percentage point.

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Meanwhile, Brisbane, Adelaide and Perth house and unit rents also saw increases over the month — by up to 1.9 per cent.

According to Louis Christopher, managing director of SQM Research: “The move towards regional living was the primary reason why investors outside our two largest capital cities did so well.

“However, if you owned an investment property in Darwin or Perth, or indeed regional Australia, you have had one of the best years ever.”

He added: “It’s clear that Sydney and Melbourne apartment investors were the losers of 2020, with rents and prices falling.”

On the other hand, Sydney and Melbourne recorded declines in both house and unit asking rents over the month at 0.8 of a percentage point and 0.1 of a percentage point for houses, and decreases of 0.6 of a percentage point and 1.9 per cent for units rents, respectively.

Year-on-year

Year-on-year, capital city average asking rents declined for both houses and units by 2.7 per cent and 7.1 per cent, respectively.

Sydney saw a high 10.3 per cent decline in units and 7.6 per cent decline in houses in December 2019, while Melbourne’s asking rents declined by 4.8 per cent for houses and 8.7 per cent for units during the same period.

Darwin was the big winner, posting a significant 27.3 per cent growth since December 2019.

Perth also saw sizeable increases to rent payments, with house rents jumping by 12.0 per cent, while unit rents also grew by 9.3 per cent over the year.

What about vacancy rates?

Over the month of December 2020, the national residential rental vacancy rate did increase by 0.1 of a percentage point to 2.2 per cent, according to SQM Research, pointing to slightly higher supply.

It brings the total number of vacancies in Australia to 76,658 vacant residential properties. This time last year, the national vacancy rate was higher at 2.5 per cent.

The rise was predominantly driven by higher vacancy rates across Melbourne and Sydney, while Brisbane, Perth and Hobart remained stable. On the other hand, Adelaide recorded a minor vacancy rate decrease of 0.1 of a percentage point.

Melbourne’s vacancy rate increased to 4.7 per cent in December and continues to be the highest vacancy rate in the nation. It’s a far cry from the 2.5 per cent recorded in December 2019.

Sydney’s vacancy rate is now sitting at 3.6 per cent.

Moving forward

Will the trend of smaller capital cities overtaking Sydney and Melbourne continue on to 2021?

For Mr Christopher, the trend has started reversing. However, it could be far-fetched to expect a complete reversal, according to him.

“The truth is, we are starting to see at least a part-reversal,” he said. “CBD and inner suburban vacancy rates have been falling again. And inner urban agents have been telling me demand has clearly picked up for such properties.”

On the other hand, it’s unlikely to be a complete reversal, with the managing director conceding that demand for inner city property will remain affected by the closure of the international border as well as ongoing caution around potential future lockdowns.

“This will mean 2021 will remain largely a tenant’s market in the inner cities but will also very much remain a landlord’s market for regional Australia,” he concluded.

Canberra leapfrogs Sydney for most expensive rent
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