Karma time for tenants as apartments lie vacant and rents plummet | Money


The apartment on Sydney’s Castlereagh St was a good find: on the corner of the park and surprisingly easy to get. The agent told Swetha, a 24-year-old account manager, that she had been approved the day after she applied, quicker than she was really ready for.

In city centres across Australia, where rents have kept rising for years, thousands of apartments lie vacant. Over the past 12 months rents have dropped 19.6% in the Sydney CBD and 17.5% in the Melbourne CBD, according to data from Suburbtrends.com.

In Melbourne under stage four restrictions, where in-person inspections are banned but moving house is permitted, inner-city vacancies have skyrocketed. Vacancies rose 20% between July and August, and a huge 140% compared with August last year, according to data from Corelogic.

The Australian Bureau of Statistics says national stamp duty revenue had also dropped 19% for the June quarter, the worst since 1974, as house sales slowed.

In Sydney, Swetha’s new apartment was advertised in December at $890 a week. In July she and her housemate got it for $650.

“There were tonnes of apartments that were available,” she told Guardian Australia. “This apartment in particular is next to Hyde Park, two bedrooms, one bathroom, a car space. It’s a corner apartment with a full city view. It used to be an Airbnb.

“We came in to see it and it was gorgeous and such a good bargain. Now I am working from home every day. It’s just such a beautiful spot.”

In a market that for years had been very hostile to tenants, she says her July house hunt was a completely different experience.

“I never thought I could afford the CBD before this,” she says. “They approved us the next day, without even meeting us or seeing the place. It was up to us to say yes or no. They said: ‘Yes you can have it.’ We were like: ‘OK, we need to think about it.’ It was powerful.

“They were really keen to get long[-term] tenants. The place was vacant for months and months … The apartment block is still quite empty.”

In Melbourne, law student Matilda Simpson managed to get a reduction for her house in East Brunswick last month. She and her boyfriend, who has a pre-existing condition that makes contracting Covid-19 a highly dangerous risk, had been some of the many to leave the city during the pandemic.

“My boyfriend has a lung condition so we have been living out in East Gippsland,” she says. “The idea to get a rent reduction – I only applied for it after the second lockdown started in August. We were paying for the room but we weren’t there.

“I thought we should explain the medical situation, and I instantly got a reply back from the real estate agent saying the landlord’s business has been affected too, but yes she was happy to agree to a rent reduction for three months, even after the end of the lockdown, which is really generous.

“It was quite a lot, about 30%. I applied for it at the start of August, end of July, and it was done within a few days.”

Simpson says she’d seen vacancies rising in Melbourne as others also left the locked-down city.

“My friend has recently moved into a place in Footscray … I know it has been really hard for her to find a housemate. It’s really hard to fill rooms. People are moving back interstate to be with their families.

“Interestingly there is now greater demand in regional places. There are barely any rental listings there – they’re getting snapped up.”

Even closer to the city, Erin, a scientist who lives in Carlton North, also secured a rent reduction for a place she’d been in for the past five years.

“My flatmate moved out in June, and I tried to find a replacement, which was hard as not many people were looking,” she says. “And then lockdown started again.

“I contacted my agent. My lease is up for renewal anyway at the end of October. Just querying whether I could get a small reduction. I wasn’t in a position where it was life or death, so I just asked for $50 a week, not much, slightly less than 10% less. And they granted it straightaway. They set that for three months.”

Although she doesn’t intend to move, Erin has been “watching the market for a long time” and has noticed the difference.

“Not so much any more in [stage] four, but in [stage] three I noticed a lot of one-bed apartments in the inner north drop in price. I did go to one inspection in Brunswick, where a few hours after ending the inspection they sent a text saying they had dropped the rent. There is definitely stuff sitting vacant.”

Also in Melbourne, Sarah Hartree and her partner, William Sweet, negotiated a rent reduction in April when Sweet lost his job at the height of the pandemic’s first wave. His pay was cut by 80% before being made redundant later.

Their real estate agency, Nelson Alexander in Fitzroy, approved a request for a 20% reduction for one month, with no need to pay it back. Since then Sweet has luckily found a new job and the pair have continued to see prices in the rental market dropping.

“We are actually looking at moving at the end of the year,” Hartree says. “We want to save for a house and there has been so much media attention on dropping rents in Melbourne. If we can save even two or three hundred a month, that is extra money for our house deposit.”

Renters in Sydney are also on the hunt for reductions.

“Everyone I know is getting rent reductions – all my friends, my old house. They got a rent reduction,” Swetha says.

“Another friend of mine … was in Wolli Creek and his landlord wouldn’t reduce his rent, so he just moved out to an apartment in the same building three levels down.”

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