Two-tier rental market emerges as inner Sydney and Melbourne rental stock shoots up

Two-tier rental market emerges as inner Sydney and Melbourne rental stock shoots up

Rental listings have shot up in inner city pockets of Sydney and Melbourne since COVID-19, despite Australia’s broader rental market beginning to tighten, new CoreLogic research showed. 

Total listings on the national rental market fell by 10.9 per cent in the 28 days to August 9, according to the research firm.

But the opposite is happening in some inner city employment centres with 100,000 to 500,000 people, known by the Australian Bureau of Statistics (ABS) as statistical area 4 (SA4) regions.

Which rental markets have had increased listings?

Ten of the 88 SA4 regions analysed had more properties listed on the rental market when comparing the 28 days to March 15 with the 28 days to August 9. The number of listings dropped in the remaining 78 regions.

Eight of the 10 SA4 regions which had an increase in listings were in Sydney and Melbourne, while the other two were in Brisbane and Adelaide.

Inner Melbourne saw the greatest jump in total rental listings, ballooning by 52 per cent to 10,764 between mid-March and early August. The median weekly asking rent in inner Melbourne declined by 9.6 per cent to $500 in July.

The second most affected SA4 region was Sydney’s city and inner south region, which surged by 48 per cent to 5,474 listings since mid-March. Landlords in this area have had to adjust their rental expectations, with the median asking rent plummeting by 10.5 per cent to $654 a week in July.

Rental stock in Sydney’s city and inner south region increased by a third to 2,985 listings in the same period. The median listed rent dropped by 10 per cent, or $81, to $731 per week.

SA4 region

Total rent listings – 28 days to March 15

Total rent listings – 28 days to Aug 9

% change

Melbourne - inner

7,068

10,764

52.3%

Sydney – city and inner south

3,681

5,474

48.7%

Sydney – eastern suburbs

2,232

2,985

33.7%

Melbourne – inner east

2,015

2,354

16.8%

Melbourne – inner south

2,233

2,489

11.5%

Sydney – inner west

2,478

2,743

10.7%

Brisbane inner city

2,475

2,728

10.2%

Sydney – North Sydney and Hornsby

3,178

3,415

7.5%

Adelaide – Central and Hills

1,090

1,136

4.2%

Sydney - Ryde

1,568

1,596

1.8%

Source: CoreLogic.

The 10 regions that have seen a spike in listings represent about 27 per cent of Australia’s total rental market, according to CoreLogic.

When looking at SA2 regions, or medium-sized areas with between 3,000 and 25,000 people, it was again areas in greater Sydney and Melbourne which saw the biggest jumps in rental stock between mid-March and early August.

Melbourne’s Southbank and city, as well as Sydney’s Haymarket and The Rocks, all saw surges in rental listings of more than 100 per cent in the same period. 

In Southbank, rental stock swelled by 116 per cent – from 568 listings in mid-March to 1,230 by August 9. Yet the inner Melbourne suburb had an average of 450 listings per month in the 12 months leading up to the beginning of COVID-19.

According to SQM Research, Sydney is the capital city with the highest vacancy rate in Australia, with 3.6 per cent of rental properties empty in July, down by 0.2 per cent since the month prior. Its CBD, however, has a vacancy rate of 13.2 per cent, easing by 0.6 per cent since June.

Hobart has the tightest rental market among the capitals, at 0.7 per cent, which dropped by 0.2 per cent since June. 

Why demand for inner Sydney and Melbourne rental markets is falling

Eliza Owen, CoreLogic’s Australian head of research, said the bounce in rental stock was unusual for this time of the year.

“It is expected seasonally that most areas would see a decline in rental listings, as rental stock on market is usually highest at the beginning and end of each year,” she said.

“For the four years prior to 2020, rental stock on market at mid-August has on average, been -3.2% lower than what is seen over mid-March.”

Ms Owen said the findings showed how rental markets have been impacted differently post COVID-19.

“The dominance of Sydney and Melbourne with regards to heightened rental supply highlights the much localised nature of the shock to rental demand that has been seen since the onset of the pandemic,” she said.

One of the factors contributing to the fall in housing demand is international border closures.

“This is because the majority of new migrants to Australia are renters, at least initially,” she said.

Increased high-rise property development activity has added to the supply pipeline in some inner city areas, which has also contributed to a jump in rental listings during the economic downturn.

Louis Christopher, chief executive officer of SQM Research, added that people have been relocating away from densely populated inner city pockets to regional areas due to COVID-19.

“This very likely has been as a result of fears surrounding coronavirus and the ability for many employees (particularly in the corporate sector) to work remotely,” he said.

What property investors should note when rental stock is rising

Some inner city rental markets may appear dire when looking at the short-term numbers, but this doesn’t necessarily mean investors should take drastic action about their property portfolios. 

If you’re a property investor who’s playing the long game and is able to hold your property long-term, you may have little reason to panic. This is particularly the case for investors with healthy loan-to-value ratios (LVR) and stable incomes. Consider consulting a financial adviser for professional advice if you’re concerned about your situation.

Given the escalating home loan rate wars, it might also pay to look around and see if there are better mortgage rate deals to snap up.

For example, Homestar Finance recently slashed its variable interest rate for investors to as low as 2.49 per cent (2.52 per cent comparison rate) for those paying principal and interest on a mortgage with 70 per cent LVR. 

Variable rates generally allow you to benefit from lower repayments if the interest rate falls, but it does also mean your mortgage repayments could increase if the rate hikes. Variable rate home loans often have more flexible features, including the ability to make extra repayments or providing an offset account. 

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Does UBank offer home loan pre-approvals?

If you’re applying for a home loan with UBank, you can first get an approval in principle. You’ll need to provide information about your job and earnings, your household expenses, the assets you own and the debts you owe. 

UBank will assign a home loan specialist to discuss these details over a phone call, which can take about 30 minutes. 

The bank will then confirm if you’ve received in-principle approval for your home loan. Depending on how you submit your documents, this could take a few days or a few weeks. If successful, the approval will be valid for 60 days. 

Why should I get an ING home loan pre-approval?

When you apply for an ING home loan pre-approval, you might be required to provide proof of employment and income, savings, as well as details on any on-going debts. The lender could also make a credit enquiry against your name. If you’re pre-approved, you will know how much money ING is willing to lend you. 

Please note, however, that a pre-approval is nothing more than an idea of your ability to borrow funds and is not the final approval. You should receive the home loan approval  only after finalising the property and submitting a formal loan application to the lender, ING. Additionally, a pre-approval does not stay valid indefinitely, since your financial circumstances and the home loan market could change overnight.

 

 

Where can I get all the information about an ANZ first home buyer’s loan?

As a first home buyer, you may require help and hand-holding, and as such ANZ has the buying your first home section on its website full of important information. ANZ also has a form in this section you can fill out to get a free consultation from an ANZ First Home Coach and create your own plan for buying your first home. This coach will help you understand where your current income is being spent and plan for your home loan repayments. You’ll get a clear picture of the costs involved in purchasing a property and how to budget or save for these costs. The coach will help you understand different deposit options and manage your accounts to enhance your savings.

There are three types of ANZ first home loans - Standard Variable, Fixed, and Equity Manager. The features, interest rates, and terms for each are different, and you can compare them here.

When they apply for an ANZ home loan, first home buyers can also get guidance on applying for the First Home Owner Grant (FHOG). This is a one-off government grant that may be available to you when you’re buying your first home. The eligibility criteria for FHOG differs between the different states and territories, which is why it’s helpful to have expert advice when applying.

How do you qualify for a CBA home loan with casual employment?

Qualifying for a home loan without a full-time job may be challenging, but it can be done. The first step is to understand how a CBA home loan is assessed when you have casual employment.

Most lenders will assess your expenses and savings while checking your loan eligibility, checking on factors crucial to home loan approval, such as if your bills are paid on time and what your credit score presently looks like. 

Your income can be one of the most critical factors to determine your final approved home loan amount. As such, you’ll need to provide payslip copies to lenders to assist them in assessing your income during the loan tenure, regardless of your employment status, full-time, part-time, or otherwise.

Casual employees will want to be casually employed for at least 12 months to be eligible for a home loan. Alternatively, you want to have worked as a permanent casual worker (working for a fixed number of hours per week) for at least one month, or you should have been in your current job for a minimum of three months (if the hours are irregular) to be eligible for the loan.

Does Westpac offer loan maternity leave options?

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Some families find it difficult to meet their home loan repayment obligations during this period. Flexible options, such as the Westpac home loan maternity leave offerings, have been put together to help reduce the pressure of repayments during parental leave.

Westpac offers a couple of choices, depending on your circumstances:

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  • Mortgage Repayment Pause: You can pause repayments while on maternity leave, provided you’ve made additional repayments earlier.

When applying for a home loan while pregnant, Westpac has said it will recognise paid maternity leave and back-to-work salaries. All you need is a letter from your employer verifying your return-to-work date and the nature of your employment. Your partner’s income, government entitlements, savings and investments will may help your application.

What is the average length of a home loan?

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However, home loans can also have a shorter or longer term. They may be as low as ten years or up to 45 years, depending on the product and lender. 

It’s worth remembering that a longer loan term usually means you’ll end up paying a lot more interest in total, but your scheduled repayments may be more manageable. In contrast, you could opt for a shorter loan term if you are comfortable making large repayments in exchange for paying less interest over the term of the loan.

How do I get a Suncorp home loan pre-approval?

Getting home loan pre-approval helps you work out a budget to help you search for a suitable property and make an offer with confidence. Once you put in an application, you should get your pre-approval outcome within two business days. To help get a fast turnaround time of your pre-approval application, ensure all the information and documentation that Suncorp requires. This includes proof of identification, recent payslips, bank account and credit card statements.

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Once you get Suncorp home loan pre-approval, it’s valid for 90 days. If you don’t find a property you wish to buy in this time you may be able to apply for an extension, speak to your Suncorp lending specialist about this.

How long does Bankwest take to approve home loans?

Full approval for a home loan usually involves a property valuation, which, Bankwest suggests, can take “a week or two”. As a result, getting your home loan approved may take longer. However, you may get full approval within this time if you applied for and received conditional approval, sometimes called a pre-approval, from Bankwest before finalising the home you want to buy.  

Another way of speeding up approvals can be by completing, signing, and submitting your home loan application digitally. Essentially, you give the bank or your mortgage broker a copy of your home’s sale contract and then complete the rest of the steps online. Bankwest has claimed this cuts the approval time to less than four days, although this may only happen if your income and credit history can be verified easily, or if your home’s valuation doesn’t take time.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

What are the NAB term deposit interest rates for businesses?

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NAB doesn’t charge any monthly account or application fees. The interest is calculated daily and for the 90-day term and six months term, you will get paid when the deposit matures. For the 12 months term, you can either choose to get paid monthly, quarterly, half-yearly or annually. 

If you wish to withdraw your funds before the deposit matures, you need to give NAB 31 days notice. However, they do make exceptions if you’re experiencing hardship and need the funds immediately. Either way, you may have to bear the prepayment cost, which you can learn more about in the Terms and Conditions.

How much deposit do I need for a home loan from ANZ?

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How do I get a pre-approved home loan with Aussie?

Getting Aussie home loan pre-approval means receiving conditional support from Aussie Home Loans to borrow the money you need to buy a home. 

It’s an indication of the approximate amount Aussie may offer you, subject to some terms and conditions. Keep in mind, having a pre-approved home loan does not guarantee an actual approval of your loan when it comes time to buy.

Aussie home loan pre-approval often involves speaking to one of the lender’s brokers. You can make an appointment online. You’ll often have to submit your personal details and other information about your assets, income, liabilities and expenses.  It’s worth remembering that a pre-approved loan is usually valid for a few months.