The rental crunch continues to see prices soar in most parts of the country, but renters can still find desirable suburbs where they’ll be paying the same, if not less than pre-pandemic.
As life post-Covid normalises, rents are edging back to what they were in 2019, but new analysis from PropTrack shows some pockets still have medians that haven’t budged.
“While population growth has restarted and international students are returning, they are not yet at the same levels we were seeing pre-Covid,” PropTrack economist Anne Flaherty said.
“Suburbs that rely on these residents are continuing to see rents below pre-COVID levels.
“With white collar workers spending less time in their offices, many are continuing to favour outer suburban and regional areas, hampering the recovery of inner-city areas.”
Suburbs in Melbourne and Sydney have seen the biggest decreases in price since March 2020.
Pyrmont in Sydney had the largest price drop nationally for houses, decreasing by 11.1% to be $800 per week, followed closely by Chippendale, which had a 10.5% drop to be $850 per week.
South Melbourne also saw a 9.3% decrease in price, becoming $680 per week.
For units, it was Millers Point in Sydney that had the largest decrease in rent since March 2020, dropping by 16.7% to become $750 per week, while units in Mont Albert North experienced the same percentage drop to become $500 per week.
Melbourne and Sydney experienced large price decreases in rent throughout Covid. Picture: Getty
While Melbourne and Sydney suburbs experienced large drops in price during Covid, Brisbane suburbs were more likely to see price growth as popularity for the city boomed throughout the pandemic.
There was only one suburb that has experienced a substantial price drop since Covid – the price for units in Hendra fell by 15.1% from March 2020 to become $450 per week.
Rent increases unlikely to ease
While some suburbs are showing slow early signs of easing prices, others have skyrocketed and locked many renters out of their preferred neighbourhood.
Across the combined capital cities, the median rent was $485 per week in the September 2022 quarter, and in the combined regional areas, the median rent was $450 per week, making suburbs with decreasing rent a rarity.
Ms Flaherty said a number of factors have led to skyrocketing rents.
“First, the average number of people in a household shrunk from 2.6 to 2.5 between the 2016 and 2021 censuses,” she explained.
“While this sounds marginal, at a population level it reflects a significant rise in the number of homes required.
“During the past few years, there have also been more investors selling than buying property. This has been due to increased lending restrictions for investors and higher land taxes.
“Over 2020, we saw rents decline in many areas, while at the same time property prices were rising, prompting many landlords to sell. This reduced the total pool of rental accommodation, even with population growth turned off.
“Finally, population growth is now back on now, and we are seeing more international students and migrants return, adding to competition for rentals.
“The return of tourism has also led to the conversion of some long-term rentals to the short-term market, like on Airbnb.”
City-based agents say bargains now non-existent
Finding a bargain rental in the inner-city throughout lockdowns in Sydney and Melbourne was commonplace, with many tenants jumping at the chance to upgrade or lock in a long, cheap lease.
“One- and two-bedroom apartments suffered the most through 2020 and 2021,” Sophie McGuinness, business development manager at Jellis Craig Stonnington, said.
“In suburbs like South Yarra, Prahran, and Richmond, we saw anywhere between a 12% to 20% reduction in rent prices.”
“There are brand-new apartment buildings that are finally doing quite well, but there is a lot of old 1950s brick buildings that have not fully recovered price-wise and are still about 5% off what they were achieving in 2019.”
However, after a slump at the beginning of the pandemic, rental market has now completely flipped, according to experts, with rising prices and intense competition.
“We’re not seeing any ‘bargains’ come through for rent and if anything, there aren’t many listings on the market, which explains the increase in rents as the supply is low and the demand is high,” Ms McGuinness said.
“This is the best rental market we have seen since 2018 and those properties that are advertised for less than what they may have achieved in 2019 typically are in need of a renovation or cosmetic upgrades such as painting, new flooring, or new window furnishing.
“Prices aren’t soaring but they have recovered swiftly from the enormous drop in rent through early 2020 to early 2022. I was predicting a steady recovery in rent over the next six to 12 months but we saw our Stonnington market mostly fully recovered in the space of four months.”
Ms McGuinness gave the example of a one-bedroom unit in South Yarra, which was leased out in April 2019 for $350 per week after being snapped up in 12 days.
The price then dropped to $300 per week in January 2021 and the listing was online for a full three months before someone signed a lease. It was then re-let in February 2022 for $320 per week after taking four weeks to find a tenant.
Those tenants have just renewed the lease for a further 12 months with a $10 per week increase to take effect in February 2023.
Tenant advocates say renters are being taken advantage of
With prices expected to continue increasing, tenancy advocates say struggling tenants are being taken advantage of.
“The high rents and rent increases don’t meet the accepted definition of a market value, being two willing but not anxious people coming together to negotiate,” said Leo Patterson Ross, CEO of Tenants Union NSW.
“The prices being sought are leveraging that anxiety and are above market value.
“There are some landlords who decline to participate in this, and hold rents below market rates. Some affordable homes are easy to find but difficult to get into, like public or community housing, others are hard to find often, because renters stay as long as they can so they don’t [relist] very often.”
As for tenants concerned with rent increases, they are encouraged to have these written into fixed-term rental agreements.
“Particularly for longer leases, this can be an effective way to at least manage the rate of increases and know what you might be dealing with,” Mr Patterson Ross said.