Adelaide Rental Market Remains Strong Despite COVID-19

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Posted by Natalie on April 9, 2020

Property Managers Report Adelaide Rental Market Strong During March & First Quarter Of 2020.

CoreLogic has released their figures for the first quarter of 2020 and as I suspected, Adelaide’s property market has remained strong, despite the social distancing effects brought about due to the Coronavirus COVID-19 pandemic.
All capital cities across Australia reported growth for the first 3 months of 2020. For the month of March, with greater social distancing rules for home inspections and auctions in place, again all capital cities, apart from Hobart (-0.2%) showed growth.

You have probably heard about the number of auctions that have been passed in, which could be more a reflection of sellers wanting a higher than market price quick. Studious buyers could also be adopting a ‘wait and see’ approach to auctions, looking for better value.

More importantly, for those that have invested in property, to rent out as either a source of income, or to build as a nest egg to use at retirement, the Adelaide rental market results from property managers is positive.

Gross Rental Yields March 2020 For Australian Capital Cities

With housing values still rising over March, rental yields also remain strong.

Capital City Gross Rental Yield
Sydney 3.0%
Melbourne 3.2%
Brisbane 4.4%
Adelaide 4.5%
Perth 4.3%
Hobart 5.0%
Darwin 5.9%
Canberra 4.8%
Combined Capital Cities 3.5%

The impact of COVID-19 on employment, impacting on tenants ability to pay rent due to hardship has already been seen, but this will not be a long term problem. When life does get back to ‘normal’, and it will, the Adelaide rental market is positioned well as an investment.
There are more people looking for houses, townhouses and units to rent than there are those to rent in Adelaide CBD, north eastern suburbs, eastern and western suburbs of Adelaide. In other words the demand is higher than the supply, especially with properties that have been renovated!

For those amongst you wondering whether you’ve made a sound financial decision investing in the Adelaide rental market in the midst of this Coronavirus uncertainty, I point you to the stock market activity over the last 3 months.
Now do you feel better?
Both markets will bounce back, that is a certainty and given that people investing for the future do so with a long-term view, you should be happy with how the property market remains strong despite the COVID-19 pandemic, especially with regards to the rental segment across Adelaide metropolitan suburbs.

For those landlords that have cheaper properties for rent, the tenants on Centrelink payments as carers or the like will be insulated from most economical effects, during the next 3-6 months. Due to the sheer number of people’s employment being effected, it’s likely that some landlords will have tenants experience hardship and will struggle to pay the full rental payment on time.
Salvan’s property managers will, of course be on top of this, on your behalf, to minimise any loss of rental income if that situation becomes necessary. With the government payments to people effected by a loss of employment due to COVID-19, this should be minimal but will also depend on how long businesses remain closed and how long it will take to get people back into the employment they were stood down from.

Property managers have, unfortunately, had tenants request rent freezes because they have been ‘stood down’, yet have substantial savings. There will always be a number of people trying to take advantage of the system. The government has made it clear they’re not going to protect people who will be evicted because they refuse to pay the full rent on time when they’re not suffering severe hardship.

To assist landlords further, Salvan Property Management has a data base, to collect details of people looking for properties to rent on the Salvan website, which has already made a number of landlords happy recently, with tenants placed immediately, saving the landlords loss of rental income and advertising costs.

Natalie Salvati (Principal of Salvan Property Management) is a registered Real Estate Agent (RLA 276287) with over 20 years experience in the property management market, looking after metropolitan Adelaide landlords, or as we like to say ‘property investors’.

Are you a frustrated landlord that wants to become a stress free property investor?


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