Sydney rental market: High demand during lockdown sends rents soaring
Sydney might have spent three months in lockdown, but that hasn’t stopped the city from driving Australia to its highest annual rental increase since 2008 after a huge surge in rents.
Sydney rents have increased in value faster than every capital city bar one in the past quarter, as Australia records its highest annual rental price surge since 2008.
CoreLogic’s quarterly Rental Review revealed Sydney notched the second highest growth in rent during the September quarter at 2.3 per cent — 0.3 per cent less than Brisbane. The growth was impressive considering Sydney spent the entire quarter in lockdown.
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A shortage of stock and high demand for property is behind jump in rents, with the typical dwelling 7.2 per cent more expensive to rent than this time last year.
The figures showed the typical Sydney dwelling cost $595 per week to rent in the quarter, higher than the national median of $485. Canberra was the most expensive capital to rent at $633 per week.
The September quarter marked the first time since the pandemic started last year that rental values for both apartments and houses in Sydney have increased at the same rate of 2.3 per cent. In the past 12 months houses have become 9.1 per cent more expensive to rent compared to a 4.2 per cent jump in unit rents.
However CoreLogic found, Sydney rental yields dropped from 2.94 per cent 12 months ago to 2.45 per cent in September, which was the poorest return in Australia for investors. The average yield in Australia dropped from 3.77 per cent to 3.29 per cent over the same period.
Darwin was the only city that saw rental yields increase in the past year, climbing 0.29 per cent to 6.17 per cent.
CoreLogic research Director Tim Lawless said demand for detached housing during the pandemic and a lack of supply due to previously historically low levels of investor activity was driving the rental market in Sydney and across the country.
“Renters are clearly looking for lower density housing options, with house rents rising at more than double the pace of units rents over the past year, however this trend is starting to narrow,” Mr Lawless said.
Mr Lawless said private sector investors are the largest contributor of rental housing and up until January 2021 made up only 23 per cent of housing market activity. The proportion of investors entering the market has begun to increase with this buyer segment accounting for 31 per cent of mortgage demand in August.
Adelaide remained the cheapest capital city, with typical dwelling renting for $440 per week. Melbourne, the world’s most locked down city during the pandemic, was the second most affordable market with a typical dwelling costing $450 per week to rent.
Originally published as Sydney rental market: High demand during lockdown sends rents soaring