Sydney rents have recorded their biggest annual fall in more than a decade thanks to the last remnants of the city’s record construction boom, but cheaper rent may not last much longer, according to property experts.
Across the city, the median weekly asking rent for houses dropped $25 to $525 in the year to September, according to the latest quarterly Domain Rental Report, released on Thursday.
The weekly median unit rent declined 4.6 per cent over the year to $520, leaving renters $25 a week better off and returning to 2016 prices.
Despite this, Sydney remains the second most expensive capital city to rent a house and the most expensive city to rent a unit.
Domain research analyst Eliza Owen said Sydney’s rental market continued to benefit from the hangover of the investment boom of previous years.
“These are the steepest declines in annual rents,” Ms Owen said. “The fact that rents have fallen in both houses and units over the year really reflects the increase in supply of rental housing because of the investment boom between 2013 to 2017.”
But the vacancy rate has tightened to 2.9 per cent, suggesting that more rental properties are finally being leased, Ms Owen says.
She said it could also signal an end to falling rents because construction had slowed down significantly in Sydney.
“Rental prices could be bottoming out in the September quarter,” Ms Owen said. “The market will probably start to turn just because we’ve got steady population growth against a decline in construction.”
Median weekly asking rents: houses
SEP-19 | QOQ CHANGE | YOY CHANGE | |
Blue Mountains | $450 | 4.7% | 0.0% |
Canterbury Bankstown | $520 | 0.0% | -5.5% |
Central Coast | $440 | -2.2% | 0.0% |
City and East | $995 | -0.5% | -0.5% |
Inner West | $750 | 0.0% | -1.3% |
Lower North Shore | $990 | -1.0% | -1.0% |
North West | $600 | 0.0% | -1.6% |
Northern Beaches | $975 | 0.0% | 2.6% |
South | $625 | -0.8% | -3.8% |
South West | $450 | -2.2% | -4.3% |
Upper North Shore | $780 | -2.5% | -2.5% |
West | $450 | 0.0% | -2.2% |
Source: Domain Rental Report September 2019 |
Canterbury Bankstown has led the way in the decline with unit rents falling 5.9 per cent in the past year to $400 a week. The region has also recorded the steepest decline in house rents; a 5.5 per cent drop to $520.
Ray White national head of property management Emily Sim said the limited number of rental properties in areas like the northern beaches and the lower and upper north shore meant asking rents recorded smaller declines or remained steady.
“[Declines] don’t necessarily go across the board in Sydney. Somewhere like Willoughby and Northbridge is quite tight,” Ms Sim said. “There’s not a huge amount of development or supply.”
“While we have development or supply of new properties coming to market then rents will also be under pressure.”
But she also reported the rental market had tightened up in the last three months ending September and expected rents to rise again.
Median weekly asking rents: units
SEP-19 | QOQ % | YOY % | |
Blue Mountains | $340 | -0.7% | -1.4% |
Canterbury Bankstown | $400 | -4.8% | -5.9% |
Central Coast | $380 | 0.0% | 5.6% |
City and East | $640 | -1.5% | -1.5% |
Inner West | $530 | -1.9% | -3.6% |
Lower North Shore | $595 | -0.8% | -0.8% |
North West | $490 | 0.0% | -2.0% |
Northern Beaches | $600 | 0.0% | 0.0% |
South | $500 | 0.0% | -3.8% |
South West | $360 | 0.0% | -5.3% |
Upper North Shore | $520 | 0.0% | -3.7% |
West | $430 | 0.0% | -4.4% |
Source: Domain Rental Report September 2019 |
Renters in the northern beaches already have less negotiating power, with unit rents remaining flat at $600 a week in the past year.
Unit rentals in the city and eastern suburbs only dropped $10 to $640 in the past year and an even smaller drop of $5 for houses.
The Agency’s national director of property management Maria Carlino said rental properties in both areas were being leased more quickly.
“We have found an improvement in our open homes … the numbers have almost doubled to six to eight groups coming through,” Ms Carlino said, adding that Randwick and Coogee were the most popular suburbs to rent with listings being leased five days quicker.
“The new developments are drying up. They’re all being rented,” she said. “What has been developed is being leased … there’s not as much competition.”
- Originally published by Tawar Razaghi in Domain here.