Home Insights Tight Rental Supply Starting To Get Tighter In Inner-City Areas Now Too

Tight Rental Supply Starting To Get Tighter In Inner-City Areas Now Too

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Securing rental housing is becoming more difficult, with new and total property declines in February and a surge in demand for rental housing in central Sydney and Melbourne.

The number of new listings of rental properties in February decreased by 13.1% to 10.6%, and the total number of rental properties decreased by 5.2% from the previous month to 20.8%.

The total number of rental properties last month was slightly lower than in December last year, but otherwise the rentable inventory is the lowest since April 2004.

In the markets of each capital and other states except Darwin, the total number of rental properties has declined over the past year.

Sydney and Melbourne are two cities where rent supplies have not been as tight as elsewhere since the pandemic broke out.

However, the total number of rental properties in February decreased by 22.7% and 28.2% from the same month of the previous year.

The total number of rental properties in Sydney has been unprecedented since December 2017, but has not consistently declined in Melbourne since the outbreak of the pandemic.

Sydney apartment

Currently, the rental supply is very tight in the city center market.Photo: Getty


Importantly, we expect the Sydney and Melbourne rental markets to tighten further throughout 2022 as cities reopen, travelers return and migration resumes.

Looking at the Central SA4 regions of Sydney and Melbourne (Melbourne-Inner and Sydney-City and Inner South), we can see strong evidence of rising rental demand. Historically, these were the most lessor-centric markets in the country.

In February 2020, a month before Australia was blocked and closed its borders, 6.4% of all rental properties nationwide were in Melbourne-Inner and 3.8% of all rental properties were in Sydney-City and Inner South. was.

With the border closed, Melbourne-Inner’s national listing share rose to 15.6% in December 2020 and to 6.8% in Sydney-City and Inner South in August 2020.

Fast forwarded in February 2022, Melbourne-Inner accounted for 10.5% of all rental properties nationwide, and Sydney-City and Inner South accounted for 4.6% of all rental properties.

Rents in central Melbourne fell sharply after a pandemic due to declining demand.Photo: Getty


The share of rental stocks in these two markets remains high compared to pre-pandemic levels, but is declining and is expected to decline further in the coming months.

For landlords in these markets, intensifying competition for stocks can make it easier to secure tenants. Unfortunately, for lessors, this can also lead to higher rents.

In fact, there is already some evidence that rents have increased in these markets over the last six months.

Nationwide, rentable inventories continue to decline, rental prices are rising, and many people are no longer able to access safe rental housing.

More supply of rental inventory is urgently needed, especially as interstate and international migration increases throughout 2022.

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