Sydney rental market: vacancies hit historic low, why it might get worse
Super strong demand and lack of supply has resulted in the tightest rental market in Sydney’s history meaning further price rises are almost inevitable.
The number of properties listed for rent on realestate.com.au has fallen to its lowest level since mid-2003, driving up prices to the fastest growth on record.
New data released in the PropTrack Rental Report shows that rental stock has rock bottom amid strong demand and tightening market conditions.
Declines in total rental listings were recorded in NSW, Victoria, Queensland, and South Australia, with only Tasmania recording a growth of 17.5 per cent in its rental supply over the past 12 months.
Melbourne experienced the biggest year-on-year decline in total listings, experiencing a 32.8 per cent drop – with Sydney in second at a 24.2 per cent drop.
At the same time, Melbourne and Sydney also experienced the biggest uptick in demand per listing rising 45.8 per cent and 26.8 per cent year-on-year.
The strong demand for rentals had pushed the number of days in market to a record low of 20 in Sydney – falling five days over the year.
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PropTrack director of economic research and report author Cameron Kusher said that the demand for rentals in both Sydney and Melbourne would be likely to continue as overseas migrants settle into those cities.
“With fewer investors purchasing homes to rent out, the limited supply of stock coupled with strong demand is leading to heightened increases in advertised rental prices.,” Mr Kusher said.
“The growth and tightness in the rental market appears to be shifting from regional areas back to the capital cities. This is being driven by the return of many people who migrated regionally during the pandemic back to capital cities and the lift in overseas migration.”
“Most overseas migrants to Australia settle in these cities with few purchasing a property before arrival, which is likely to keep demand for rentals heightened as supply of rentals is expected to continue to recede, pushing prices higher.”
Capital city rents increased by 3.2 per cent to reach $485 per week, while rents in regional areas remained at $450 per week.
However, strength in rental growth has shifted away from regional areas back to capital cities over the past year.
Prices for unit rentals in Sydney and Melbourne have also risen by 4 and 5 per cent respectively.
“The decline in lending to investors is likely to exacerbate existing supply challenges at a time when demand is picking up.”
“To ease these tight conditions, Australia’s rental market needs either reduced demand through more first-home buyer purchases or increased supply through more investor purchases. Neither is likely to occur imminently and as a result we expect rental rates will continue to climb.”
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Originally published as Sydney rental market: vacancies hit historic low, why it might get worse
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