How much your rent will rise this year: every NSW suburb revealed

Sydney could be headed the way of San Francisco where the homeless camped in tent cities has become rampant, as exclusive modelling reveals rents in once affordable parts of our city are on track to increase by up to $400 a week.

Sydney tenants could be stung with rent rises of up to $400 a week this year – even for units well outside the inner city – as declining rental supply and surging demand heat the market to a boiling point.

One of the growing issues for tenants is that cash strapped landlords are selling their properties to combat interest rate hikes, with distressed sales surging over the past year. This has been accelerating the decline in rental supply.

Projections from research group Suburbtrends revealed house rents across the average Australian suburb would rise 11 per cent for the year, while unit rents would leap up an average 27 per cent.

More extreme rental increases were expected in Sydney’s southwest, Parramatta region and southern suburbs, the modelling showed.

Rents in these regions were forecast to rise by up to 54 per cent, according to the research, which analysed patterns from historical data against current supply and demand and other market drivers.

Some of the areas with the biggest forecast jump in average rents were Punchbowl, Lakemba, Auburn and Campsie, home to families with some of the lowest incomes in middle-ring Sydney.

Suburbtrends data scientist Kent Lardner said these projected rises were “severe” and would leave renters on the lowest incomes with “nowhere to go”.

“There is a ripple effect occurring,” he said, noting that more affordable areas would get the biggest rent increases.

“As renters are crowded out of more expensive areas they are moving to more affordable regions. Those with higher salaries eventually crowd out those with lower incomes, who are forced to move further and further out.”

Mr Lardner said Sydney could be headed the direction of San Francisco in the USA, where homelessness and residents camped up in “tent cities” has become rampant.

“We are accelerating to a San Francisco situation where no one will be able to restock the shelves (in shops) and perform other critical services in the city because the people working those jobs cannot travel that far.

“You reach the stage where things grind to a halt because no one can do anything.”

Mr Lardner said the main driver of the rent increases was that not enough homes were being built to match record population growth.

“Hundreds of thousands more people are coming here but we’re not building hundreds of thousands of new properties.”

Pressure on landlords is mounting. SQM Research data published this week showed distressed sales, involving those who can no longer afford their repayments, surged over the past year and were expected to continue growing.

The volume of distressed listings in NSW increased 9 per cent from December and was 16.3 per cent higher than in January of last year.

Paddington house mates Justin, Patricia and Nicola recently got slumped with a large rent rise. Picture: Tim Hunter.

“The 9 per cent rise in NSW for the month was very abnormal and suggests some vendors in NSW are increasingly desperate to offload their properties,” said SQM Research director Louis Christopher.

He added that landlords who were struggling to make the repayments on their residences were offloading their investment properties to try to limit their debt burden.

“Generally with property owners who have an investment property plus a principal place of residence, the first thing that happens for those on the stress line is they cut down on discretionary spending.

“Selling the investment property comes next and we are seeing a bit of that now going on.”

PropTrack data showed investor-owned properties accounted for 35.2 per cent of sales in 2023, up from 28.3 per cent in 2022.

Mr Christopher said landlords selling up could become more pronounced in the months ahead, but he noted that the most influential factor driving up rents in the short-term was the imbalance of supply and demand.

A queue of renters seen at a recent inspection in Surry Hills. Picture: Sam Ruttyn

“We have underbuilding relative to explosive population growth,” he said.

PropTrack economist Anne Flaherty said high migration levels would continue to drive up rents this year.

“New migrants are far more likely to be renters and Sydney is one of the busiest cities for new arrivals,” she said.

Ms Flaherty said investor activity has significantly dropped over the last five years and persisting high interest rates may prove a hurdle for new investors in 2024.

She expected many investors who cashed out of the market would sell their properties to a cohort of tenants who have the means to exit the rental market by becoming homebuyers, further draining the supply of rentals.

Justin Rynne, with housemates Patricia and Nicola, lives in a share house in Paddington and was recently told the rent would be going up by 14 per cent, pushing the cost to $1080 a week.

A unit in this Botany building was recently listed for $450 per week higher than the 2022 rent. .

“We were really worried because we know the reality of the rental market at the moment,” he said.

Mr Rynne said they were able to negotiate with the landlord and reduce the increase to 9.5 per cent and felt “lucky” given they had heard stories of tenants being asked to leave after disputing a rent rise.

“I think we are honestly really lucky to have had a good real estate agent and a landlord that was open to negotiation,” he said. “Not everyone experiences that.”