University suburbs’ are suffering from COVID-19: REA's Nerida Conisbee

EXPERT OBSERVER

Foreign students unable to get into Australia is a blow to Australia’s education sector with Universities Australia estimating that over the next three years, universities will lose over $16 billion due to COVID-19. With 25% of all tertiary students from overseas, this has flow on not only to university coffers but to the wider economy.

For property, the rental market was hit immediately as a result of COVID-19. The number of available rental properties jumped as students didn’t return to campus and short-stay listings were instead leased on the long-term market. Airbnb is slowly getting back to business with domestic tourism starting again but there are problems arising for investors. Particularly, in areas that already had weak rental demand (primarily apartments in western and south-western Sydney), as well as areas with high proportions of rental housing aimed at students.

Not surprisingly, the areas that are most at risk are those that are close to large universities. Melbourne CBD, Clayton and Carlton have seen big increases in properties listed for rent on realestate.com.au, of which a number are aimed at students. In many of these locations we are starting to see a steady rise in properties for sale. Property owners may not yet be in distress but no doubt many are worried about the possibility of a continued deterioration of these rental markets. The potential for mortgage repayment relief stopping in September is problematic, particularly as it’s unlikely foreign students will be back before then.

NERIDA CONISBEE is the Chief Economist at the REA