Sydney tenants face rising rents
If you thought you were safe from rising rents in Sydney, then you might want to think again after a new report announced that rents are set to rise in Sydney for quite some time.
Undersupply in Sydney remains a big problem, and even though the last couple of years have seen more developments taking to the skies across the city, there is still a gaping big hole for rental apartments and new housing. This problem is most evident in the more affordable outer suburbs such as out west and down south.
Due to this high demand and low supply situation, median house rents in Sydney increased by 4 per cent in 2014, whilst units increased by 2 per cent (figures taken from Domain Group’s Rental Report). The only other Australian capital city that saw an increase was Hobart where rents grew by 3.2 per cent, whilst every other capital saw either no rise or a drop in rents.
So how much are tenants paying in rent today? On average the weekly rent for a house will cost you $520, whilst a unit stands at $500. Migrants are not helping the situation either, with more people every day arriving in Sydney in the hope to find work and a place to live. This increase in population is evidently putting a strain on Sydney’s property market with demand fully outstripping supply which means rental prices are not going to slow down any time soon.
The suburbs with the highest rental growth for units include Upper North Shore (5.3%), Canterbury and Bankstown (2.7%) followed by the Inner West (2%) and South West (1.6%). Typically, these outer suburbs like Canterbury and Bankstown and the South west are also some of the most affordable parts of Sydney, but for how much longer? Investors who have previously bought here will of course be reaping the benefits of rental increase, but it’s not so good news for tenants.
Today, there are as much as one in three properties that are rented, of which more and more of these are higher-value properties. Those on higher incomes won’t feel the pressure as much, but those on a lower income will start to struggle with fewer options available and more competition to compete with, particularly when the more ‘affordable’ suburbs are starting to become less affordable.
There is an answer though to these rising rents and that is either to increase supply or have an affordability barrier, but I don’t think this is likely anytime soon. In the meantime, tenants will have to do their best to find the most affordable rental properties in the suburbs that they favour, or move to somewhere more affordable.
Published on 15th of January 2015 by Marty Stanowich