It’s the virus that just keeps on giving! Via the ABC:
Rob Edwards has had to change the way he does his job due to coronavirus but he’s still had plenty of work — the real estate agent has been able to find tenants for properties listed in inner Perth.
Mr Edwards has swapped open houses for virtual tours and private appointments, and has seen changes in the market as well.
“Some short-term rentals and holiday lets are coming back into the market for regular rental, and on the demand side it’s had tenants downsizing and consolidation,” he said.
“But also there’s been mining workers returning back to Perth, so they can fly in and out of Perth to mine sites without restrictions of quarantine [if they’d arrived from interstate].”
Mr Edwards feels the Perth rental market is fairly balanced for now, but rental vacancies are forecast to rise nationally, particularly in Sydney and Melbourne, and early indicators support that view.
Rental listings surge as rents drop
According to the latest figures from SQM Research, national asking rents fell over the past month, down 2.4 per cent for houses and down 1.1 per cent for units.
In Sydney, rents for houses declined 5 per cent, Hobart posted a 4.2 per cent fall and Melbourne saw rents drop 2.6 per cent.
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Realestate.com.au says rental listings on its platform were up 8 per cent across the country, compared to this time last year, with the biggest increase in listings in New South Wales, Victoria and Tasmania, while Western Australia had the largest decline in listings.
Domain Group saw a 10 per cent rise nationally between March 30 and April 26, compared to a year ago, with Sydney and Melbourne listings up 19 per cent and Hobart listings up 24 per cent, while listings in Perth fell 10 per cent.
Nationally, SQM Research said there were more than 105,000 properties listed for rent as of Saturday — up from around 84,000 in early March.
The increased supply of rental properties comes as demand decreases.
“People who have lost jobs or income are trying to save money so are moving back in with parents, moving in with friends, dissolving share houses,” Domain economist Trent Wiltshire said.
“Net immigration has also fallen, there are fewer international students and workers … fewer young people looking to move out.”
As construction continues despite other industries being shut down, more new apartments and houses will appear on the market.
Louis Christopher from SQM Research expects a surplus of about 100,000 dwellings this year, leading to a doubling of rental vacancies nationally.
Holiday rentals up for longer-term lease
There’s another source of properties being put up for rent — holiday rentals that are sitting empty.
Airbnb is by far the biggest platform and the number of listings are significant.
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Thomas Sigler from the University of Queensland studied the Airbnb market in Australia over a period of more than two years, and found listings were growing by around 2 to 3 per cent per month, with big influxes in summer.
“Any given month, you had between 100,000 and 130,000 dwellings listed as Airbnbs,” Dr Sigler told The Business.
“Every time there was a spike, rather than some being listed and some being delisted, we saw an increasing number of listings, so we were looking at approximately 30 per cent year-on-year growth.”
Dr Sigler says the hotspots for Airbnb are the inner city suburbs of the capitals, including Sydney, Melbourne and Perth, along with coastal spots such as Surfers Paradise, Byron Bay and the Mornington Peninsula.
His analysis found the proportion of entire houses or apartments listed on Airbnb increasing, while private rooms and shared rooms on offer declined, indicating a growing professionalisation of the platform.
As coronavirus restrictions escalated, bookings on Airbnb tumbled. According to analytics firm AirDNA, new bookings in Australia dropped from around 84,000 at the start of March to 19,000 in mid-April, a decline of more than 75 per cent.
On the north coast of New South Wales, Nerissa Reynolds manages around half a dozen Airbnb properties including her own, through her business Bay Escapes Management, but the area is deserted compared to normal.
“The beaches are usually really busy, the car parks, the streets, the cafes, the restaurants … it’s totally different to say this time last year, when Blues Festival was on,” she said.
“I am in the process of just about to lease out one of my properties for 12 weeks, just to get us through, and one of the others is looking at permanent rentals, probably for six months.”
Other owners who use her service are happy to leave their holiday rentals empty, waiting for a surge in domestic travel once restrictions ease.
Ms Reynolds says she’s watching the updates from the Government closely.
“Every day it changes really, like everything else, so I think if we can hopefully stick it out and hopefully there might be changes, who knows, in the next month, and people are going to be able to cross the borders and do short interstate stays.”
Listings surge in Bondi, Surfers Paradise, Byron Bay
However, with international tourism grounded for the foreseeable future, some holiday rental owners will be looking to make a long-term change.
Louis Christopher expects a substantial number to move into the conventional rental market, further increasing listings.
“At this point we’re well aware that a lot of those Airbnb properties are entering into the longer-term leasing market … I would expect at least 30,000 to 40,000 will move over,” he said.
Domain has seen rental listings surge in some holiday hotspots, with 73 per cent more new listings in Bondi Beach over the past month compared to the same period last year, a 123 per cent increase in Byron Bay and 171 per cent increase in Surfers Paradise.
Considering all the factors dampening demand for rentals at the moment, Domain economist Trent Wiltshire says higher vacancy rates and more discounting on asking rents is the likely outcome.
“[It’s] likely that rents will fall in coming months, particularly in those areas that had lots of Airbnbs,” he said.
In inner Perth, Rob Edwards’ agency Here Property has listed around half a dozen holiday rentals for longer-term lease so far.
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“For some of them I think it will be a permanent transition, for others I think once this situation does subside, they will return to the short-term market,” Mr Edwards said.
He says most are listed as furnished, but some landlords have removed furniture when tenants have requested.
Airbnb’s Australian country manager Susan Wheeldon told the ABC that to date, “we have not seen a material drop in the overall number of listings on our platform”.
“While the COVID-19 crisis has significantly disrupted the tourism industry and wider economy, we know that travel is resilient in the long-term and will ultimately recover,” she said.
The company has established a fund to help accommodation hosts that have been impacted by cancellations related to the pandemic.
Despite an uncertain timeframe, Australians will be able to holiday at home again and international visitors will eventually return, and Thomas Sigler says Airbnb is not going anywhere in the meantime.
“In terms of the big picture, this will be a blip in the radar. It will be an obvious data point, what happened in the first half of 2020,” he said.
He expects the elements of sharing economy platforms such as Airbnb will only become more prevalent in the conventional rental market, with more flexibility offered.
“Making flexible lease terms, adding things like furnished and semi-furnished, and adding some flexibility that might be some middle ground between complete short-term and long-term rentals,” Dr Sigler said.
