Sydney’s rental crisis continues with fewer listings and higher demand

Things have taken a turn for tenants grappling with Sydney’s ongoing rental crisis, with new research revealing the market has hit a new, grim milestone.

There’s no relief in sight to rental pressures across Sydney. Picture: Jeremy Piper

There is no end in sight to rental pressures across Sydney with available rentals falling almost 20 per cent over the past year.

The PropTrack Rental Report for March 2023 has revealed the second biggest year-on-year decline for Sydney in the number of rental listings on realestate.com.au, down 18.2 per cent.

It comes as the demand, based on the number of inquiries per listing, rose 16.7 per cent which has seen rents across Sydney rise by 11.3 per cent.

The report also showed vacancy levels across the Harbour City at record lows, with less than 1.7 per cent of rental properties vacant.

Rental pressures across Sydney continue to intensify, according to a new report. Picture: Jeremy Piper

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PropTrack’s director of economic research and report author Cameron Kusher said Sydney was continuing to see rents rising, fewer properties available and more competition.

“It’s definitely getting tougher for people to rent in Sydney,” he said.

“What we have got is way too much demand and not enough supply.”

However he said one aspect not touched on was the drop in rents during the height of the Covid pandemic.

“Rents did fall quite a long way during the pandemic, particularly for apartments in the inner Sydney areas,” he said.

“This is a catch up for the weakness during that time.”

PropTrack Director of Economic Research and report author Cameron Kusher.

Mr Kusher said the challenges for renters were also being exacerbated by the fact that higher interest rates had reduced borrowing capacities.

“This is making it harder for renters to transition into first home buyers and more difficult for investors to purchase properties, restricting rental supply,” he said.

He said the high migration rates and people moving back to cities had also ramped up the competition for rentals.

“On the supply side, there’s a lot of housing under construction however a lot has been purchased by owner occupiers,” he said.

“The quickest way to see an easing is to get more investors into the market.”

Mr Kusher said while Sydneysiders could expect to see further rises in the cost of renting, conditions were improving across regional NSW with rental listings increasing by 34.8 per cent over the past year and demand easing.

“Fewer people are leaving capital cities for regional areas, some are returning to the capital cities and those who are staying regionally are likely now purchasing,” he said.

“These trends are expected to continue, leading to a further easing of regional rental pressures.”

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Finder research has revealed almost half of Australians are struggling to pay their rent.

It comes as new research reveals nearly half of Australian renters are struggling to keep a roof over their heads.

The Finder research shows that rental increases of up to $500 per week in capital cities have ramped up pressures with 45 per cent of Australians struggling to pay rents in April and 83 per cent begging for rental controls to be introduced.

“The ten consecutive cash rate increases have added over $10,000 to the annual cost of servicing an investor home loan in Australia, and it appears many landlords have pushed their increasing costs onto tenants,” the research states.

Finder’s Graham Cooke.

Finder’s head of consumer research Graham Cooke said the cash rate increases had been hurting renters just as much as mortgage holders.

“Soaring rents have resulted in almost one in two renters struggling to keep a roof over their head, while only a third of mortgage holders are in a similar position,” he said.

“Renters tend to be younger Australians, who are far more likely to have lower savings buffers and experience stress due to the cost of living.

“Anyone who knows somebody who is looking for a place to rent right now will tell you – there are few properties, long lines, and piles of applications before you.”

Mr Cooke said rising rents continued to put pressure on tenants, while giving landlords the upper hand when it came to negotiating prices.

However he said there were tricks to help people finding their weekly rents rising.

“For those who are facing a rent increase – start a conversation with your landlord about what is reasonable,” he said.

“You do have some wiggle room – as there is also cost involved in finding new tenants.

“It’s also important to note that your landlord cannot increase your rent more than once every 12 months.”

The research also revealed that almost one in three renters have taken extreme measures to secure a rental property, including offering to pay several months of rent upfront and pay above the rental asking price.

Originally published as Sydney’s rental crisis continues with fewer listings and higher demand