Sydney tenants get $170 per week blow as vacancies dwindle
Sydney’s rental crisis is becoming more costly by the month. Tenants are now being asked to pay an average of $744 per week in rent – about $20 more than in January – as dwindling rental vacancies drive up prices. Current rents were also about $170 per week higher (29.6 per cent) than a year ago, when typical rent on a Sydney home was about $575 per week. That’s an increase of about $8800 a year.
The rent increases have followed a sharp protraction in the supply of available housing, with total rental listings dropping by nearly half over the past year. Only about 1.3 per cent of Sydney’s rental housing stock is available for rent, down from 2.3 per cent a year ago. Rental availability has become particularly strained within cheaper middle-ring suburbs and those surrounding the major universities.
Just 0.5 per cent of all rental housing in Newtown is available, while in neighbouring Marrickville it’s 0.6 per cent. Both areas are popular for University of Sydney and UTS students. Kensington and Randwick, near UNSW, had vacancy rates of 0.6 per cent. The Canterbury Bankstown area was also short of rentals – just 0.7 per cent of all housing across the LGA, the biggest in Sydney, was available. Housing experts explained that suburb vacancy rates this low indicated a dire rental shortage.
The only way many tenants could secure housing in this environment was by bidding up rental prices. SQM Research director Louis Christopher said the rental crisis could get worse – not just in Sydney, but across the country. “We are expecting a further tightening in rental vacancy rates over the month of February based on evidence that weekly listings have fallen again thus far in the current month,” Mr Christopher said.
“We have previously warned that the months of February and March will be the most difficult time for tenants in the national rental market in many years. “Thereafter we are hoping for some relief given the expected increases in dwelling completions and an overall reduction in housing formation.” Landlords were in a strong position and increasing rents may encourage more investors to enter the housing market, Mr Christopher said.
“The ongoing surge in rents is pushing up rental yields, especially with falling prices. I believe ‘would-be’ investors will be attracted to higher rental yields in later 2023, provided the cash rate peaks at below 4 per cent.”
Greater investment activity would be good for tenants in the long-term as it would increase the supply of rentals, Mr Christopher said. “However, if the cash rate rises above 4 per cent it is likely home buyers including investors will largely stay away from the housing market for another year. And so investment dwelling approvals will remain in the doldrums, setting us up for another super tight rental market in later 2024 and 2025.”
Real Estate Institute of NSW chief executive Tim McKibbin said the current rental crisis would be the worst on record. “Demand for rental accommodation across Sydney is at an all-time high. Many REINSW members simply have no available properties on their rent rolls,” he said. “Others that do are reporting that properties are being snapped up immediately.” Mr McKibbin said it was difficult to determine when the situation would improve.
“(Agents) are telling us that they’ve never experienced a rental market like this. There are so many tenants who are choosing to remain in their current rental property, even in circumstances where the property no longer suits their needs. “The availability of stock in the rental market is at an all-time low, weekly rents are rising and tenants are faced with ever-increasing living costs. “None of these things are showing any signs of getting better, in fact, they’re getting worse. All stakeholders agree that increased investment in the sector is the only solution, but the current strategy is to constantly erode the rights of landlords. Something has to change.”