With COVID-19 shutting down large parts of the economy, tourism in particular, appears to be the worst-hit industry of all.
As all non-essential travel has ground to a halt, the first casualty has been property owners who have been renting their properties on a short-term basis, through platforms such as Airbnb.
Since the COVID-19 crisis presented, we’ve started to see an increasing surge of short-stay properties hitting the rental pool - which has in turn put increased pressure on both vacancy rates and rental prices.
The outlook for these tourist-driven suburbs is not good in the short-term and investors clearly need to be wary of investing in such areas.
Ripehouse Advisory recently released their COVID-19 vs Australian Property Report outlining what the virus meant for real estate gathering responses from 146 industry experts as well as crunching numerous statistics.
The report identified 76 suburbs that have already been impacted by the downturn in tourism and 11 suburbs where the asking rents had dropped by more than 20 per cent.
Top of the list for suburbs to avoid was Healesville, 52 km out of Melbourne, which has seen asking rents fall by more than 43 per cent.
Second was the northern beaches suburb of Balgowlah Heights in NSW that has seen a 3 per cent increase in the vacancy rate and a 33 per cent reduction in asking rents
Tourist hotspot, Palm Beach, where almost 15 per cent of all the properties are listed on Airbnb, has seen a 29 per cent drop in asking rents.
Ripehouse Advisory estimated that suburbs heavily exposed to tourism and travel have experienced an average reduction in value of 2.5 per cent, some have seen more than 10 per cent.
Other suburbs that have been heavily impacted by COVID-19 and the tourism drop-off are Palm Cove in Queensland, Pearl Beach in NSW and Noosa, in Queensland.
Anna Cooper, API magazine editor, in her response to the report, felt the suburbs with short-stay accommodation would be heavily impacted.
“In what has become nothing short of a cash cow in recent years for many savvy investors chasing sky high yields, I anticipate that Airbnb and short term rentals are set to take the biggest hit. With the tap to this market switched off overnight investors who have spared no expense fitting out luxury, fully contained fit-outs are now left holding over-capitalised, empty investments,” she said.
Ripehouse Advisory looked at suburbs with at least 2.5 per cent of the residential property leased on Airbnb and researched rental vacancy rates and changes in asking rents.
The research found 189 suburbs that had spiking vacancy rates over the last few weeks and identified 66 suburbs already highly impacted by reduced rent per week.
Complete and original article written by Kathryn Welling and published by news.com.au: Tourist suburbs most impacted by COVID-19 should be avoided by investors