Sydney renter Felicia Willeam will look to move out further from the city to try to keep her cost of living as low as possible as she faces higher rents when her lease is up this year.
“It’s kinda scary when we have to move out,” said the 29-year-old graphic designer. “I probably couldn’t find something within my price range any more.”
Felicia Willeam has been lucky to escape huge rent increases for now but she knows she will have to make a drastic change when her lease is up on her Five Dock unit.Credit: Wolter Peeters
Willeam and her partner know they have got a good deal. They pay $570 rent for a one bedroom unit in Five Dock – a suburb that has jumped 16.7 per cent to a median of $700 in the year to December 2023.
Their other alternative is to try to buy their own home, but even that is a risky prospect in a rising interest rate environment.
“It’s going to be somewhere around Parramatta or Sutherland where it is more affordable for us,” said Willeam, who works for Ray White. “Mortgage repayments are still really high but at least buying a property there’s a bit more security and it’s our own place.”
The couple is not alone as tenants in almost every Sydney suburb faced higher rents as of the December quarter of 2023, compared to a year earlier, Domain’s latest Rent Report shows.
Beaconsfield in the inner west posted the largest jump of 43.8 per cent to a median of $1150 a week.
That was followed by Edgecliff (up 40.9 per cent), Padstow Heights (up 39.1 per cent) and East Ryde (up 38.4 per cent).
Postcodes in the city and eastern suburbs also dominated the areas that rose most. Popular neighbourhoods including Coogee, South Coogee, Clovelly, Bronte and North Bondi all rose by at least 26 per cent over the past year.
Far-flung locations in the Central Coast and Blue Mountains dominated the list for the biggest declines.
Domain’s chief of research and economics Dr Nicola Powell said there was a clear trend of inner-city suburbs commanding premiums as workers return to offices and the need for space further afield loses steam.
“The areas of growth continue to be central locations, largely speaking. The majority of those suburbs that have seen a drop or are stable are Central Coast, upper north shore or the Blue Mountains,” Powell said.
Powell offered a glimmer of hope to tenants, noting that at a citywide level, the pace of rent growth had started to slow in recent months.
“We’ve passed the peak of overseas net migration, we’ve got Help To Buy coming in, the cash rate is tipped to be slashed sometime in 2024. These are all things that will help alleviate pressures in the rental market.”
KPMG economist Terry Rawnsley said rents in inner-city suburbs posted the strongest growth as life had resumed to a new normal for the most part.
“There’s no surprise those inner suburbs are going gangbusters, but those coastal and tree change locations are coming off the boil as the demographic shifts over the last 12 months,” Rawnsley said.
He forecast a more stable rental market in 2024 as many of the driving forces of demand had peaked and tenants had compromised in different ways to find cheaper options.
“People couldn’t keep finding an extra 10 per cent for rents, so the market has hit an equilibrium on that front as well,” Rawnsley said.
“The number of people per household has ticked up as well which is reflecting share housing coming back into trend and kids returning home and staying for longer.”
He said while the worst was over for now, low building approvals pointed to another tight rental market down the track.
Ray White Surry Hills’ new business executive Anita Sano said that there was still a big mismatch between the number of tenants and available rental properties.
“Supply and demand is off kilter with stock shortages, that’s got a lot to do with increasing rents, and mortgages have gone up,” Sano said.
But she had noticed from mid-last year that more tenants were shopping for cheaper rentals by either downsizing, share housing or moving further afield.
“I did notice a lot of people joining households and renting two bedrooms. People living in three-bedroom homes downsizing to two-bedroom homes.”
BresicWhitney chief executive Thomas McGlynn said popular city and eastern suburb rentals were the most sought after since a return to the office.
“Tenants on the ground would say it’s difficult to secure a property to rent,” McGlynn said.
He said many were returning to rent in Sydney after living in more lifestyle locations outside the metropolitan area and some regional destinations.
“They’re returning and some are buying, but some are choosing to rent first. That’s creating a bit more competition for those who are renting.”