Rental markets across the country could soon see prices weaken as a result of the coronavirus lockdown, despite rents increasing over the month of March. Rent values increased 0.3% nationally over the month of March, but were up just 1.2% for the quarter and 1.4% the past 12 months, according to Corelogic.
Despite signs of weakening conditions in the month of March, the overall quarter results show rental increases in all capital city regions, led by a 1.7% increase across the Perth.
Sydney remains the most expensive rental market, with a current median rental value of $577 per week. In Melbourne, rental growth in the March quarter was its weakest in six years with rents rising by 0.3% over the month up to $444, with a quarterly increase of 1.1% and 3.5% lift over the past year. Rental growth across Brisbane was flat over the month, with house rents remaining unchanged and unit rents increasing marginally.
The first quarter of the year, traditionally a time of stronger rental growth due to tenancy renewals, has yet to reflect the full impacts of the coronavirus crisis, with social distancing regulations beginning to weigh on the economy from late-March.
Corelogic noted that the economic “hibernation” enforced by the government to halt the spread of the virus would continue to impact the housing markets heavily for the next 12 months at least, particularly rentals, as job losses, stand-downs and subsequent drops in income mount.
“A deceleration in the growth of rents, as well as a decline in some areas, signals that this growth momentum is facing disruption,” Corelogic head of research Eliza Owen said.
In a bid to support renters, the national cabinet banned residential evictions for six months from 30 March. However, many officials believe lockdowns could remain in place for “at least six months”, despite the numbers of new infections stabilising.
Investors should take particular note of this decline. Although we’re sure you’re already aware of the effects that COVID-19 will have on your potential income. However, this data may highlight how long this decrease will last for — if migration remains depressed and rental market prices remain down, many investors may find themselves forced out of the market in coming quarters.