Covid-19 leads to fall in rent prices: Is now the time to move and save?

As well as travel bans and increased unemployment, the Covid-19 pandemic has also led to a dramatic rise in the number of vacant properties across Australia. According to SQM Research there were over 20,000 more vacant homes in May 2020 compared to February 2020*.

The combination of more homes available to let and less renters willing to move right now has led to a decrease in rent costs. This is especially the case in Australia’s most populated cities, Sydney and Melbourne. 

So, is now the time to move and lock in a cheaper rental?

Savings for Aussies not in a fixed-term agreement

First of all let’s be clear: if you already have a lease then it isn’t worth breaking it for a cheaper rental. Getting out of a fixed-term tenancy agreement early will not only cost you more, but will also leave a mark on your rental history.

The potential savings to be had from jumping on a cheaper rental are only really available to those who are not currently in the middle of a lease agreement or who live in the family home and are thinking about flying the coop.

Rents drop in trendy suburbs, from Bondi to St Kilda West

So just how dramatically have prices decreased? Well, of Australia’s eight major cities, weekly rental costs have dropped significantly in Sydney, Melbourne and Hobart in the last financial quarter.

SQM’s data shows that the number of vacant rentals in Sydney rose by nearly 8,000, between February and April alone, with average weekly rents for houses and apartments falling by approximately 8.8% and 4.3% respectively.

Average weekly rents for units in Sydney’s backpacker hotspot Bondi fell by a significant $100 between the beginning of January and May, while in Melbourne’s sought after St Kilda West, the average weekly rent for a three bedroom house dropped dramatically from more than $1,000 to just over $700.

What to consider when moving

While improving your long term savings is a pro, there’s a lot more to consider before packing up your stuff and shipping out.

Moving itself can be a stressful business as you have to sort through all of your belongings and hire a removalist or a truck. Not to mention that you need money for a security deposit and to have your services connected, including electricity and internet.

So, before you make the decision to go for a cheaper rental, think about whether you are financially stable enough to handle a move right now. For example, do you have an emergency savings fund? Is your job secure enough at this moment in time?

If you are not currently tied to a lease agreement, you have the means to move and you feel confident enough in your financial stability, then it might not hurt to pounce on a cheaper rental now. Or if you’re not so keen on the idea of moving, you could even try asking your real estate agent  for a rent reduction, especially if prices have gone down in your area.

Not sure what to do with your long term savings? Why not put them in a high interest savings account? You can check out interest rates on our savings account hub or take a look at the accounts on offer below.

*SQM Research gathered on 29 May 2020, correct as of 28 May 2020.