SQM figures show vacancy rates in Melbourne’s Docklands were over 13% in January. Central Sydney’s vacancy rate was over 6 per cent. Rates apply to all types of housing, but units dominate these markets.
Christopher doesn’t expect downtown vacancy rates to reverse for some time.
“The demand for properties in the city center will continue to be affected by the closure of the international border as well as by the continued caution on [the possibility of] future city closures, ”he said.
Andrew Wilson, consulting economist at Archistar, said prices in some apartment markets could drop if owners of vacant homes who “cling to the high cost” decide to sell.
He says investors who plan to enter the market now would be better off looking to suburban single-family homes that have higher rental yields.
“It would really be a leap of faith to invest in [inner-city units],” he says.
Grant Foley, buyers agent and director of Grant Foley Property, says Sydney is a two-tier market, with performing house prices and “struggling” units.
“However, not all units are created equal” and some would do better than others, “he said.
“Units that have an element of uniqueness and rarity, like an art deco [era] unit in a small block in a prime suburb, would prove to be good investments, ”Foley said.
He says price growth for new “generic and surplus” apartments in high-rise towers is likely to continue to be limited.