‘Unexpected’: Where Sydney rents are falling

Rents in some Sydney suburbs have been dropping despite skyrocketing prices in the rest of the market. This is where.

Rents in some Sydney suburbs have been dropping despite skyrocketing prices in the rest of the market and a crippling rental shortage that has hit “crisis” levels.

The unexpected rental decreases occurred in 35 suburbs and the average fall was about one per cent to five per cent, according to analysis of PropTrack figures.

Rents also fell in more than 80 suburbs spread across regional NSW, including in satellite areas of Sydney such as Wollongong and the Southern Highlands.

It has been the opposite in Greater Sydney as a whole, where record low vacancy rates and rampant population growth through migration drove up rents by an average of 17 per cent annually.

$250 per week drop: this Roseville was listed for $1200 per week in June, down from $1450 per week in January.

Most of the few Sydney suburbs where rents dropped were located in the city’s north, northwest and Central Coast, with the biggest rent reductions recorded for houses.

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“Higher rental supply and lower demand would be a factor in these areas,” said PropTrack senior economist Paul Ryan.

There was a particularly sharp rental drop in parts of The Central Coast, where landlords who had previously listed holiday homes on short-stay sites like Airbnb were leasing them out for longer periods, increasing the supply of homes available for tenants.

This followed recent threats from regulators to clamp down on the short-stay sector, with some local governments such as Byron Shire Council already beginning to enforce strict limits on short-term rentals.

The biggest rent reductions on The Central Coast were all in beach suburbs traditionally popular with holiday-makers, including Avoca Beach, Copacabana, Foresters Beach and Terrigal.

Tenant demand has been extremely high in most areas. Picture: Liam Kidston

A similar trend occurred in upper northern beaches suburbs Collaroy and Warriewood, where median rents fell, and Freshwater, Narrabeen and Elanora Heights, where rents inched up at well below the city average.

Rents also dropped in coastal holiday towns in regional NSW such as Casuarina, Mollymook and Ulladulla.

Rising rental supply was also a factor in the non-coastal regions where rents decreased over the past year, with landlords often subdividing their properties into multiple sources of revenue.

These subdivisions were then relisted at cheaper prices, while the increased supply of available rental properties took pressure off tenants to snap up homes quickly.

Areas popular with Sydneysiders seeking a regional tree-change during the height of the pandemic also saw rent drops as more workers returned to the inner city.

This Terrigal house was recently listed for $50 per week less than the rent advertised in June.

And a nearby home, also in Terrigal, was listed at $80 per week lower than the June rent.

Notable examples were Mittagong and Bowral in the Southern Highlands where house rents dropped more than $30 per week annually.

“Fewer people are moving to regional areas and some are moving back so there has been less (tenant) demand,” Mr Ryan said.

“At the same time, the inner city has had some of the biggest rent rises and that’s a story of Covid trends reversing.

“You can see that too with unit rents, in aggregate terms, rising faster than house rents. It was the opposite during the pandemic.”

One of the biggest rent drops in Sydney was recorded in upper north shore suburb Roseville, just north of Chatswood, where the average weekly rent on houses was about $100 lower than a year ago.

Recent rental listings in the suburb included a house on Darling St listed for $1100 per week, well below the $1400 per week rent in 2021 and the $1200 listed last year.

On nearby Dulwich Rd a house was recently listed for $1200 per week, down from $1450 in January.

In neighbouring suburb Lindfield the average drop for houses was $50 per week and in Turramurra it was $25.

Further west, in Glenorie, the average drop was $45 per week. Recent Glenorie listings included a townhouse on Old Northern Rd listed for $535 per week, down from $658 in January.

Ray White Data Group analyst William Clark said declining demand for homes in lifestyle suburbs popular during the pandemic was evident, not just in rents, but in property prices.

“Coastal suburbs have been heavily affected with a reverse sea-change occurring,” he said, noting that rising interest rates and growing restrictions on short-term rentals were a factor.

Mr Ryan said tenants outside of the pockets where rents had fallen should expect further rent rises during the start of 2024, followed by a period of more stagnant growth.

PropTrack economist Paul Ryan.

This Roseville rental was last listed $100 below the 2022 rental price.

“Its doubtful rents can increase much more than they already have since the rises have been so significant, but the start of the New Year does historically see a lift in rents,” he said.

Rental vacancies hit a record low of 1.06 per cent in September, indicating an “extreme” shortage of accommodation, according to PropTrack.

Economist Eleanor Creagh said conditions in the market-at-large could be summed up as “dire”.

“Accelerating population growth has revealed a startling shortfall between the number of people expected to call Australia home, and the number of homes for those people to live in.”