Sydney and Melbourne’s inner-city rental markets are starting to witness a resurgence in demand, heating up the competition for the limited number of homes up for rent.
Figures from PropTrack showed that both cities reported fewer new homes listed for rent in February compared to last year.
Sydney saw a 16.2% fall in new rental listings, while Melbourne posted a drop of 11%.
In terms of total rental listings, Melbourne recorded a more severe drop at 28.2% while Sydney registered a 22.7% decline.
The number of total rental listings in Sydney is now at its lowest point since December 2017.
Melbourne, on the other hand, has not seen consistently-low rental supply since the onset of the pandemic.
A recent report from Domain showed that the national vacancy rate had dropped to 1.1% in February, the lowest since Domain’s records began in 2017.
Consistent with PropTrack’s records, the Domain report indicated that vacancy rates in Sydney and Melbourne declined the most on an annual basis.
REA Group executive manager for economic research Cameron Kusher said the two cities would likely face further tightening throughout this year as migration recommences with borders reopening.
“We can see strong evidence of the strengthening demand for rentals if we look at the central ‘SA4’ regions of Sydney and Melbourne — historically, these have been the most renter-centric markets in the country,” he said.
Prior to the period of lockdowns and border closures, Melbourne-Inner comprised 6.4% of all rental listings across Australia while Sydney-City and Inner South took a 3.8% share.
During the height of the pandemic, the share of total rental listings went as high as 15.6% in Melbourne-Inner and 6.8% in Sydney-City and Inner South.
As at the end of February 2022, Melbourne-Inner accounted for 10.5% of total rental listings nationally and Sydney-City and Inner South had 4.6% of all rental listings.
“While the share of stock for rent in these two markets remains elevated compared to pre-pandemic levels, it is falling, and we expect it to reduce further over the coming months,” Mr Kusher said.
“For landlords in these markets, more competition for stock is likely to make it easier to secure a tenant — unfortunately for renters this is also likely to lead to the cost of renting increasing.”
According to SQM Research, in the 12 months to 4 March, weekly rents for Sydney houses increased 16.7%, and 8.2% for units.
Weekly rents in Melbourne also jumped, up 6.4% for houses and 6.8% for units.
Photo by @danfreemanphoto on Unsplash
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