Amid the unprecedented impacts of the coronavirus outbreak on the economy of Australia, property investors are urged not to lose hope as housing fundamentals remain strong, according to an economist.

Diaswati Mardiasmo, chief economist at PRD Nationwide, said investor confidence in capital cities "should not waver" given the healthier vacancy rates, especially in Sydney and Melbourne.

Figures from SQM Research show a decline in vacancy rates to 2.9% in Sydney and 1.9% in Melbourne.

"Despite the decline in unique listings in the short-term rental market, which may suggest the property has been added to the long-term market instead, there does not seem to be any severe effects on the long-term market," Mardiasmo said.

Mardiasmo referred to the trend shown in the Airbnb data for the two capital cities. She said duplicate listings have increased in both Sydney and Melbourne while unique listings declined. Duplicate listings are specific listings found in at least two consecutive months.

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"This suggests that properties from previous months are still actively listed on Airbnb and have not been moved to the long-term rental market. It potentially shows that Airbnb owners are waiting longer for their properties to be rented," she said.

The decline in unique listings shown in the Airbnb data could be due to the impact of the COVID-19 outbreak on the tourism industry. Meanwhile, Mardiasmo said the long-term rental market in tourist destinations is not showing an "unprecedented increase". This will put further pressure on vacancy rates.

"Tourist destinations vary — in places that do not rely mostly on tourists such as Bondi, Gold Coast, and Sunshine Coast vacancy rates declined however in areas that do such as Byron Bay and the Whitsundays or Airlie Beach, it increased" she said.

Furthermore, there is a slowdown in the number of properties being added to the rental market. Mardiasmo said this means that there is "no added pressure" to the long-term market. Given the healthy vacancy rates, this will also build investor confidence, she said.

In conclusion, Mardiasmo said there appears to be a delicate balance between the sales and rental market.

"Those who choose not to buy may remain in the rental market, benefiting investors. However, at the same time, there will also be investors who must sit tight, as their particular property was to be occupied by international students," she said.

Louis Christopher, managing director at SQM Research, said the impact of the coronavirus outbreak on vacancy rates depends on the economy.

"We are likely to record further declines in rental vacancy rates as 2020 progresses unless the country enters into a prolonged economic depression," he said.