Sydney rental stock at record low

Sydney tenants have been served yet another blow following another change in the rental market.

Sydney’s rent crisis has moved up another gear after further erosion in the city’s supply of available rental housing.

New data from PropTrack released Tuesday revealed the total number of properties listed for rent plummeted by about 22 per cent over the last year to hit a new low.

This occurred while high population growth continued to drive stronger demand, creating tough conditions for renters.

The limited supply meant already cash strapped Sydney tenants now have to fork out an average of 16.7 per cent more for rent compared to a year ago. Median rent for all city dwellings was $700 a week.

Long lines at a rental inspection in Surry Hills over the weekend. Picture: Sam Ruttyn

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PropTrack also noted a dramatic drop in the supply of fresh listings.

New rental listings on realestate.com.au in December were 4.6 per cent lower than a year ago, and 14.5 per cent lower than the 10-year average for the month.

PropTrack director of economic research Cameron Kusher said the rental market was characterised by low supply and strong demand.

“During the pandemic average household sizes reduced quite a lot as rental prices fell,” he said. “Now we have a lot of people coming to Sydney, net overseas migration into NSW is extremely strong and a lot of those people don’t own a house so are entering the rental market.”

During the pandemic average household sizes reduce as rental prices fell.

Many investors also cashed out of their properties during the pandemic and its aftermath, further draining the supply of rentals. Investment activity has since started picking up again but the bump hasn’t been enough to improve conditions for tenants, Mr Kusher said.

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Mr Kusher said the federal government has set a goal to build 1.2 million new homes over the coming five financial years, there was a lack of plan on how to achieve that.

“There was only 8,906 new dwelling commencements in NSW, that is the lowest number since June 2012 and increasingly it is built for owner occupiers,” Mr Kusher said.

Building costs were up one third year-on-year and, with labour shortages, this was limiting the amount of new properties being built.

Increasingly properties being built were for owner occupiers at the higher end of the market building their own home.

Mr Kusher said getting people to buy off the plan was also harder, preventing new apartment projects from getting off the ground.

“Especially in NSW when you have so much infrastructure going on it takes people away from other projects,” he said. “I think we will get more housing but its probably still a while away.”

Mr Kusher added that skyrocketing rents were pushing more tenants to become first homebuyers despite the soaring cost of repayments.

First home buyer activity has increased as renters aim to escape the rental market. Picture: Julian Andrews

For those who could not afford a purchase, share housing would likely become more appealing, he said.

“When there is no meaningful increase in supply – increasingly people won’t be able to afford rent and more and more people will move into share houses,” Mr Kusher said.

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Originally published as Sydney rental stock at record low