By Sue Williams
Cash-strapped Sydneysiders looking for cheaper places to rent outside the city may at last be in luck, with rental growth showing clear signs of weakening in the regions.
Asking rents for houses in regional NSW hit fresh records, edging up 0.9 per cent to a median $580 a week in the September quarter, the latest Domain Rent Report, revealed. That is a fraction of Sydney’s 2 per cent increase to $775 a week.
Leading the growth were far-flung local government areas, including Dungog (up 19.6 per cent), Mid-Western Regional (up 15.4 per cent) and Federation (up 12.5 per cent).
Domain chief of research and economics Dr Nicola Powell said while regional rents hit new levels, the pace of growth was slowing as tenants reach their limits.
“We’ve seen two back-to-back quarters of rental growth in NSW, and growth is still happening, but it’s losing some of the momentum it built for houses,” Powell said. “Rents have reached the limit of affordability for many people after such an extraordinary period of growth that outperformed wages growth and, with cost-of-living pressures, people can’t afford to pay more.”
Some of the biggest jumps in rents by suburb, however, were postcodes in desirable sea-change locations within commutable distance to Sydney, including Wollongong’s Austinmer (up 18.8 per cent) and Newcastle’s New Lambton Heights (up 15.1 per cent).
KPMG regional economist Terry Rawnsley said that rent growth in the regions was overall slowing, with a return to market fundamentals being the driver, rather than migration.
“Twelve months ago, people could find an extra $50 a week to pay more, but now landlords are finding it harder to pass on rent increases because, in NSW, we’re reaching our limits,” Rawnsley said.
“There are still going to be pockets where there’s high demand, especially an hour or two from Sydney in areas of high amenity like Wollongong and Newcastle and on the coast,” he said. “But rents are not growing appreciably in most other locations. The supply side hasn’t kept up with demand over the past couple of years, but the market is coming back to normal.”
The regional suburb where houses jumped the most in the year to September was the south coast’s Tuross Head, up 25.5 per cent. Hallmark Real Estate Advisors property manager Isabella Morton said since COVID, demand has outstripped supply.
“We were a bit of a well-kept secret before that,” she said of the town, where rents have hit a median $650, and controversy continues to rage over a new development of 70 homes because of environmental concerns.
“But we’re so small and secluded and surrounded on three sides by water, it’s a very attractive place. We’ve had a lot of people coming here because they want to live by the beach, and they relocate and work remotely, or have a holiday home here.”
Meanwhile in the Central West’s Molong, house rents have risen 18.4 per cent over the year to $450, driven by Sydneysiders looking for a lifestyle change, said Kerrianne Kelly of Ray White Townsend Molong.
“I’ve just had a call from a couple, who are living in a storage container in Bondi and are paying $600 rent a week, which is about to go up to $700,” she said.
Some of Newcastle’s suburbs clocked the biggest jumps in house rents across regional NSW.
“So they want to come out this way as it’s a much better lifestyle. We’ve had a lot of people coming from Sydney since COVID hit, and they love living as part of a community. Everyone here bands together and helps everyone else and it’s such a great place to bring up children.”
Some unit rents have spiked even higher, with Newcastle’s Broadmeadow rising 32.1 per cent to $555 a week.
Love Realty head of property management Nathan Pensini said its sporting hub is now coming into its own as an extremely desirable place to live.
“We’ve had a lot of people coming here from Sydney as well as from further up the coast and the Central West, looking for a great place to live where there’s plenty of work,” Pensini said.
“People often work from home some of the week and commute to Sydney … the other days.
“A lot of the older places are being renovated too which is driving up rents.”