Rents have crashed in Australia’s urban centres as international students are locked out of the country – good news for those wanting to move closer to major cities.
Just 80 foreigners arrived in Australia to study during September because of the coronavirus border closure.
This represented a 99.8 per cent plunge from the 45,220 international students who arrived during the same month in 2019, the Australian Bureau of Statistics revealed on Thursday.
Rental prices have crashed in Australia’s biggest city centres as international students are locked out – good news for those wanting to live in the CBD. Pictured is a one bedroom unit at Haymarket in downtown Sydney available for just $300 a week
Border closures since March have caused vacancy rates to surge in central business district and inner suburbs of Sydney and Melbourne.
Australia’s highest rental vacancies
Docklands, Melbourne city: 17.4 per cent
Southbank, Melbourne city: 16.8 per cent
Haymarket, Sydney city: 12.8 per cent
Melbourne city: 10.8 per cent
Malvern East, Melbourne’s south-east: 9.8 per cent
Macquarie Park, Sydney’s north: 8.7 per cent
Carlton, Melbourne’s inner north: 8.4 per cent
Kingsford, Sydney’s south-east: 8.4 per cent
Pyrmont, Ultimo, Sydney city: 8.3 per cent
Clayton, Melbourne’s south-east: 7.8 per cent
Kensington, Sydney’s south-east: 7.5 per cent
Source: A Juwai IQI analysis of SQM Research data for September 2020
Georg Chmiel, the executive chairman of Chinese real estate sales site Juwai IQI, said the virtual end of international student arrivals, for now, was bad news for property investors.
‘It will be pain before gain,’ he said.
‘Student numbers are likely to keep falling and vacancies to keep rising until mid-2021.’
Melbourne’s Docklands area near the city saw its rental vacancy rate surge to 17.4 per cent in September – a fivefold increase on the 3.2 per cent level of a year earlier, Juwai figures showed.
A two-bedroom apartment there, a stone’s throw from the Yarra River, is now available for just $325 a week, a level well below greater Melbourne’s median rent of $390 a week, going by SQM Research data.
In neighbouring Southbank, rental vacancies have quadrupled to 16.8 per cent from 4.1 per cent.
Sydney’s central business district experienced a similar problem with vacancy rates almost tripling to 12.8 per cent, up from 4.3 per cent, in Haymarket.
A one-bedroom apartment in that part of the city near Chinatown is available for just $300 a week – well below greater Sydney’s $452 a week.
Upmarket inner-city suburbs are also affected, with rental vacancies at Malvern East in Melbourne’s inner south-east tripling to 9.8 per cent from 2.8 per cent.
A three-bedroom house there is being leased for just $475 a week – well below greater Melbourne’s median house rent of $515.
University suburbs are also more affordable with rental vacancies in Macquarie Park climbing to 8.7 per cent, from 4.7 per cent in an area of Sydney’s north that is home to Macquarie University.
A similar situation occurred at Clayton, in Melbourne’s south east, where rental vacancies almost quadrupled from two per cent to 7.8 per cent in a suburb that is home to Monash University.
Upmarket inner-city suburbs are also affected, with rental vacancies at Malvern East in Melbourne’s inner south-east tripling to 9.8 per cent from 2.8 per cent. A three-bedroom house there is being leased for just $475 a week – well below greater Melbourne’s median house rent of $515
Kensington, in Sydney’s south-east, saw its rental vacancy level more than double to 7.5 per cent, from 3.1 per cent, in a suburb that is home to the University of New South Wales.
The Mitchell Institute, an education think tank with Victoria University, predicted Australia would have almost 50 per cent fewer international students by the middle of 2021 if the border remained closed.
It predicted Australia would be home to 290,000 by July next year, down from 578,000 in October 2019.
‘The longer borders remain shut the more international student enrolments will decline,’ it said.
Mr Chmiel said the border closure had turned off potential Chinese property investors in Sydney and Melbourne.
Melbourne’s Docklands area near the city saw its rental vacancy rate surge to 17.4 per cent in September – a fivefold increase on the 3.2 per cent level of a year earlier. A two-bedroom apartment there, a stone’s throw from the Yarra River, is now available for just $325 a week, a level well below greater Melbourne’s median rent of $390 a week
‘Chinese buyer enquiries are down to just half the level of a year ago,’ he said.
‘These numbers parallel to drop in student visas.’
Nonetheless, cheap rents weren’t expected to last as the development of a coronavirus vaccine saw borders reopened, and revived the international student market.
Mr Chmiel urged prospective investors in China to consider buying a distressed rental property from a struggling landlord.
‘Student numbers will begin climbing again, your rents will go back up, and your investment will regain lost value,’ Mr Chmiel said.
‘If you’re looking to take advantage of this dip in the market, then the best opportunity is most likely to purchase in the hardest-hit suburbs from an owner who can no longer afford to carry the property with the lower prevailing rents.’