Sydney rents have hit record highs and experts warn the city’s rental crisis is having social implications as some are permanently locked out of home ownership and homelessness rises.
Asking rents for a typical house hit $775 a week after rising 3.3 per cent or $25 a week over the year to March, the latest Domain Rent Report released on Thursday showed.
The median asking rent for units hit $725, a 3.6 per cent increase or $25 a week in the same period.
Experts say it will take considerable time for conditions to improve. The vacancy rate is at a low 0.9 per cent in March for both houses and units – down from 1.7 per cent in December.
Domain chief of research and economics Dr Nicola Powell said it was still very much a landlord’s market. “To get to a point of being balanced between tenants and landlords at 2 to 3 per cent, this will be a slow change over time,” she said.
Powell said sky-high house prices were locking people into the rental market.
“This is an undersupply of housing in Sydney that’s built up over many years. People are locked into the rental market for longer because of those high purchasing prices,” she said.
The strongest rental growth was in the Central Coast region, where unit rents were up 10 per cent to $550 a week.
That was followed by the northern beaches, where unit rents were up 7.1 per cent – $55 a week – to $825 a week.
The Central Coast also recorded the strongest rental growth for houses – up 8.3 per cent to $650 a week.
That was followed by more far-flung and affordable suburbs, including Parramatta (up 7.1 per cent) and the outer south-west (up 6.7 per cent).
Powell said record high house and unit rents on the Central Coast were probably due to greater demand as renters sought more affordable locations out of the city, especially if they worked from home part of the week.
Powell said unit rents were outpacing houses because affordability was stretched.
“Units are outpacing houses and the fact that every single SA4 area has a record high rent says a lot about demand, stretched affordability and the pressure tenants are under.”
Centre for Independent Studies chief economist Dr Peter Tulip said the housing shortage was a big problem for a large part of society, denying some the opportunities their parents had.
“They’re understandably angry about it. We may very well see that anger reflected in next month’s federal election,” he said. “I think housing will be a big issue for some that will be renting forever. It used to be that it was difficult to buy a house in Sydney – now it’s difficult to rent a house.”
Tulip said a large majority of people were “trapped” at home with their parents.
“They’re understandably bitter. The biggest problem caused by these rising rents is the homelessness rate. It’s one of the ugliest features of modern Australian cities.”
Renter Dylan Griffiths, 32, received a rent increase of $40 a week in January for his one-bedroom unit in Summer Hill – something he begrudgingly accepted.
“I have bills going up, and my salary is not stretching with the basic cost of living,” said the high school geography teacher, who was previously elected to his local council as a Greens representative but is no longer a member of any political party.
Griffiths said his rent accounted for nearly 40 per cent of his wage.
“I’ve had to take budgeting to a new level over the past year,” he said. “Although it’s a 10 per cent increase to my rent, I haven’t had a 10 per cent wage increase. I thought a professional job that requires people to have multiple university degrees would provide some form of economic stability.”
Dylan Griffiths received a rent increase on his unit. Credit: Steven Siewert
Griffiths said he would probably have to move further west and even considered moving cities.
“Is Sydney just a playground for the rich? Or is it a place where firefighters and teachers are able to live?” he asked.
Acting CEO of Better Renting Bernie Barrett said she had not seen any change in rental conditions.
“Rent hikes are still unexpectedly high,” she said. A survey by her organisation last year of more than 1400 people found nine in 10 renters were paying more than 12 months ago, and half of their rent increases were more than 10 per cent.
House and unit rents have skyrocketed in the Central Coast region, Domain’s latest Rent Report showed.Credit: iStock
Barrett called for regulations around rental prices in Sydney to facilitate change or help stabilise the market.
“Renters have become conditioned to accept a lower standard of living. Those we have spoken to have said that action on rental issues is a key consideration for them in this coming election.”