The onset of Covid-19 may be creating a two-speed rental market, with inner-city rents declining faster than those in the outer suburbs.
Corelogic data confirms that there is a positive correlation between changes in rent values and distance to the CBD.
This means that the closer a region is to the CBD, the more likely it is that rent values have fallen.
Rent values were analysed across statistical area regions of Brisbane, Sydney and Melbourne—for each region, the median property distance to the CBD was compared with the change in total rental market values from the end of March (which marked national, stage 2 restrictions) to the end of August.
For regions where the typical property is less than 10km from the CBD, the average decline in house rents was 2.3 per cent, and 3.6 per cent across units.
For rental markets 10km or further from the CBD, house rents had actually increased 0.1 per cent, while unit values declined a relatively mild 0.4 per cent.
When examining the capital cities and housing stock separately, the strongest relationship existed between rent changes in Sydney units and distance to the CBD.
These two variables have a correlation coefficient of 0.8, suggesting that the closer a property was to the CBD, the more likely, and steep, rental declines have been through the pandemic.
The average correlation coefficient was 0.6, and the weakest positive correlation was 0.4 across Brisbane houses.
Each graph shows the change in rent values for houses and units across the horizontal axis between March and August, and the distance to the CBD along the horizontal axis.
The scatter graphs show a positive relationship between distance to the CBD and growth in rents.
