Lockdowns, border closings and a depleted pool of international students have dried up landlords in parts of Sydney and Melbourne.
With higher vacancies and rents well below previous years, landlords in the hardest-hit suburbs have lost $ 300 to $ 700 a month to their properties, new data showed.
The hardest hit areas included a mix of inner suburbs, high-density housing, and popular student centers, according to MCG Quantity Surveyors’ latest rent loss index.
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Other areas where landlords have experienced significant losses have been some more dispersed suburbs with several new housing developments.
MCG director Mike Mortlock said landlords in many of these areas were struggling to attract tenants as the supply of rents far outweighed tenant demand for a variety of reasons.
Almost 15 percent of rents in some of the areas classified as “riskiest” for landlords were vacant, figures showed.
“It all boils down to scarcity,” said Mr. Mortlock. “Overall, the rental market is actually pretty tight, there are only a few pockets in which many (objects) are available.
“Most of the worst areas to invest in are dominated by high-density units and more could come.”
My Housing Market data showed that rents in Sydney fell an average of 10 percent over the past year, while rents in Melbourne fell 14 percent. Rents in Brisbane, Adelaide and Perth rose over the course of the year.
Sydney and Melbourne represent most of the weakest rental markets as they have the most densely populated suburbs and attract the most international arrivals each year.
Sydney’s losses were highest in Mays Hill, a western suburb dominated by new high-rise blocks. The average landlord was losing about $ 516 a month, according to the Rental Loss Index.
Similar losses were experienced by investors in Box Hill, an up-and-coming suburb in the northwest dominated by newly built homes.
But the worst market in the country for landlords was Melbourne’s suburb of Caulfield East, a small suburb next to Monash University.
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Student dormitories make up the bulk of rentals in the area, and as international border closings reduced the student pool, the average landlord was losing $ 717 a month.
The neighboring suburb of Malvern East was also among the top 10 worst suburbs for landlords, with average losses of $ 328 per month.
Sydney’s Palm Beach was another suburb that has been severely affected by international border closings – albeit for a different reason.
Much of the accommodation in the region has been rented to international tourists in the past, but the lower demand for holiday accommodation has driven vacancies higher.
According to the Rental Loss Index, the average landlord is now experiencing losses of $ 444 per month.
Other markets considered risky for investors in Sydney were Kogarah Bay, Sydney Olympic Park, Schofields, Bardia, Castlecrag and Burwood.
Mortlock said most tenants had limited wiggle room to benefit from falling rents in these areas because the local apartments are not always suitable for a diverse tenant base.
For example, most of Caulfield East’s rental apartments were one-bedroom apartments.
“Tenants will have more room to negotiate, but not everyone will be interested in a deal for a shoebox that’s stuck with everyone else. In fact, more people are moving to the regions, ”he said.
20 WORST SUBURBS FOR RENTALS (due to average monthly loss)
1. Caulfield East, VIC $ 717
2. Mays Hill, NSW $ 516
3. Box Hill, NSW $ 509
4. Palm Beach, NSW $ 444
5. Burwood, New South Wales $ 393
6. Castlecrag, NSW $ 358
7. Carlton, VIC $ 339
8. Malvern East, VIC $ 328
9. Collinsville $ 326
10. Kogarah Bay, NSW $ 318
11. Melbourne, VIC $ 305
12. Sydney Olympic Park, NSW $ 294
13. Clayton, VIC $ 285
14. Box Hill, VIC $ 285
15. Schofields, NSW $ 277
16. West Melbourne, VIC $ 268
17. North Melbourne, VIC $ 253
18. Bardia, NSW $ 248
19. Arncliffe, NSW $ 245
20. Northbridge, NSW $ 233
