Sydney renters looking for relief in the tight market have few options, as only a handful of suburbs have recorded declines in asking rent over the past 12 months.
Many of those in premium pockets such as the northern beaches and the eastern suburbs remain unaffordable to average households, Domain’s latest Rent Report shows.
Houses in premium suburbs such as North Curl Curl have recorded the sharpest dip in median weekly asking rent. However, they still remain unaffordable.Credit: Wolter Peeters
North Curl Curl has recorded an 11.1 per cent decline to a still-high median of $1500 per week for houses in the September quarter followed by Clovelly at $1650 (-10.8 per cent) and Palm Beach at $1645 (-8.6 per cent).
There were 14 suburbs across Sydney where house rents are lower than a year ago, but only two of those are cheaper than Sydney’s median rent: the Central Coast’s Green Point and Booker Bay at $710 and $580 respectively.
For units, four suburbs declined by 2.6 per cent or less. All are under the record high of $720, but renters only have the choice of two inner-city suburbs. The remainder are in the Blue Mountains and Central Coast regions.
Earlwood had a 1.6 per cent decline and Darlington at $660 had a 0.4 per cent decline.
Sydney’s vacancy rate was 1.1 per cent, up 0.9 per cent this time last year, but still low.
Domain head of research and economics Dr Nicola Powell said finding an affordable rental in a premium location could feel like searching for a needle in a haystack.
“Financial pressure steers demand to any pocket of affordability that is still remaining or relatively affordable,” she said.
Powell said demand in premium suburbs including North Curl Curl, Clovelly and Palm Beach might have weakened compared to 12 months ago as renters turned to centrally located units in more affordable locations.
She said the decline might also tell who the renter is now versus 12 months ago.
“Part of the rental market is driven by those waiting to purchase. Not necessarily first home buyers but those that have sold their family home and are waiting for the right property to come onto the market,” Powell said.
“Prices are starting to recover and that in itself helps drive a change in buying decisions.”
PEXA chief economist Julie Toth said Sydney might be hitting an affordability ceiling.
“If you’re really hitting the limit of what you can afford, then with the houses coming onto the market, their prices have to be reduced as no one can afford them,” she said.
“Demand pressures are much stronger in the more affordable suburbs for renters and buyers.”
Toth said longer lease agreements could provide rental security and help to ease the squeeze in inner-city areas.
“Our property market is unusual compared to other countries in that 12 months is typical for Australia. Elsewhere, three to five years is more typical, rising to decades in some European countries,” she said.
Tenants’ Union of NSW policy and advocacy manager Jemima Mowbray said landlords in premium suburbs might have been testing the market to see what they could get, but that they might have had to make adjustments.
“They might have seen less interest when they were listing as high as they were previously,” Mowbray said.
“In some ways, the listings reflect how the market is making people exhausted and landlords can’t keep on pushing the envelope.”
Mowbray said the decline in asking rents in premium suburbs didn’t necessarily lead to more affordable properties, as renters had to compromise and look at cheaper options in the area they were in.
“That might be indicating to agents and landlords that they can’t keep listing at the price they’re listing at,” she said.
“We see families where kids have to share a room a lot longer than they intended to or families going without gardens and moving into units.”
Kristy Frazer of LJ Hooker Palm Beach said Palm Beach was an anomaly in the rental market as homes had to be vacated by the end of November or early December to be ready for holiday rentals.
“Obviously, there are not many people wanting to sign a lease for six months in the middle of winter in Palm Beach,” Frazer said.
North Curl Curl has recorded an 11.1 per cent decline to a still-high median of $1500 per week for houses.Credit: Wolter Peeters
“A couple of months back it was completely dead and now it’s radically changed. We can’t keep properties on the market for long and anything that does come on generates a lot of interest quickly.”
North Curl Curl was also a bit of an anomaly, said Rodney Scurrell of Stone Real Estate Manly.
“It’s generally not the suburb most people would choose to live on the northern beaches,” Scurrell said.
“Renters normally favour Manly, Freshwater, Queenscliff or Dee Why, and then consider a surrounding suburb such as North Curl Curl if that is not available.”