Rentals Sydney: Number of cheap rental homes drop by 66 per cent – worse to come

Sharply rising prices and dramaticaly limited supply have created the toughest conditions ever for renters in Sydney.

Sydney-siders view properties in Surry Hills for rent as prospective tenants are having difficulties securing rental properties. Crown Street, Surry Hills Picture: NCA NewsWire / Jeremy Piper

Sydney’s rental stresses have continued to worsen, with new data suggesting rental prices are surging – leaving would-be tenants unable to move into the market.

The September PropTrack Market Insights report found that the share of properties listed for rent on realestate.com.au for less than $400 per week had fallen to a record low of 10.6 per cent last month.

This figure has plummeted by almost 50 per cent, down from 20.1 per cent recorded at the start of the pandemic.

Only 5.9 per cent of homes in NSW are available to rent for under $400 per week. Picture: NCA NewsWire / Jeremy Piper

Homes were even more difficult to rent, with only 5.9 per cent of houses listed for rent under $400 per week – down from 10.9 per cent in October last year and 17.3 per cent at the start of 2020, a drop of around two-thirds.

PropTrack Director of economic research and report author Cameron Kusher said as the supply of rental properties continued to tighten, the number of listings under $400 per week would reduce even further into 2023.

“Much of these rental stresses are a by-product of rental supply remaining the same as well as rapidly rising interest rates,’ Mr Kusher said.

In regional NSW, the share of rentals below $400 per week had fallen from 52.4 per cent at the start of the pandemic to a record low of 23 per cent last month. NSW real estate.

“The shortage of rental stock across Australia is impacting all renters, but it is acutely affecting lower income households, as highlighted by the significant reduction in properties available to rent under $400 per week.”

One year ago, one in five rentals in Sydney were advertised as being available for rent under $400. This number has now dropped to one in 10 in September.
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As supply of rental properties continues to tighten, the number of affordable listings is expected to reduce even further in 2023.

In regional NSW, the share of affordable rentals had fallen from 52.4 per cent since March 2020 – with the share of houses listed for $400 per week at 14.5 per cent and units sitting around 37.9 per cent.“A lot of the reduction in the regional supply of rental units and houses is due to people moving out of the city during the pandemic; areas like the Illawarra, Richmond and Newcastle have particularly limited capacity right now.”

“The combination of first homebuyer numbers falling, investors buying homes falling and rising immigration rates all contribute to the supply of affordable rentals tightening as we head into next year.”

“Its difficult to say if the extra supply of build-to-rent or mixed-use developments will able to meet the current rental demand, particularly in capital markets like Sydney.”

Capital city rental listings had fallen nationwide from 57 per cent in March 2020 to 16.4 per cent in September.

Mr Kusher said the lack of available housing as well as increased overseas and domestic migration had created a pressure cooker environment for renters, resulting in Sydney’s fastest rental price increase since 2015, when PropTrack started recording the metric.

Sydney’s rental issues are part of a broader trend seen across Australia, where capital city rental listings had fallen from 57 per cent in March 2020 to 16.4 per cent in September.

Cameron Kusher from REA Group

ACT, Hobart, and Darwin shared the lowest number of affordable rentals, with less than 10 per cent under the $400 per week threshold.

Adelaide and Melbourne had the highest share among capital cities, however both experienced drops of 20 per cent in the number of affordable rentals available on the market.

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Originally published as Rentals Sydney: Number of cheap rental homes drop by 66 per cent – worse to come