Sydney rental prices unlikely to drop anytime soon
Even though there are plenty of investors buying property in Sydney, the rental prices are yet to fall. Instead they are actually increasing in certain suburbs.
Currently the median weekly asking rent for houses and units is $520 and $500 respectively according to Domain Group’s March quarter Rental Report. This is the highest that these rental prices in Sydney have ever been, even though the number of rental properties that are being purchased by investors is increasing.
The suburb with the greatest annual change in weekly median asking rent for houses is Leppington with a 35.8% change, followed by Rose Bay (32.1%). In terms of units, Forest Lodge saw a change of 22.2%.
Sydney is not the only city in Australia that has seen a rise in rental prices. Melbourne has also seen an increase in weekly rents with $390 a week for houses and $365 for units.
According to Domain Group’s Andrew Wilson, the increasing number of investors wouldn’t mean rents would drop. The demand still outstrips supply so rents are remaining stable. The number of investors buying property might have increased, but the housing market is still playing catch up due to the number of years of under-supply.
One important factor for a high level of demand is population growth. The population of Sydney is continuously rising, which isn’t helped from a decline in interstate migration and a rise in immigration from overseas. As the population surges, this puts a strain on the number of new housing that is required, with the supply already falling behind.
However, there has been a slight increase in the vacancy rates in Sydney which could mean that supply is starting to pick up. Housing Industry Association economist Geordan Murray said a surge in supply had been recorded with 50,000 new homes begun in NSW. However, they are yet to reach the market.
Many of these new homes are off the plan apartments and units which could take a few years to complete before being habitable. It’s now becoming a waiting game.
If Sydneysiders are looking for a drop in rental prices then either the supply has to increase, or the demand for housing will have to fall, and I certainly can’t see either of these two things happening just yet.
Published on 17th of April 2015 by Marty Stanowich