Sydney “remains a landlords’ market” according to Domain in its latest rental report, where it reported that apartment rents had surged 5 per cent in the June quarter, with house rents rising 3.3 per cent. Rents for apartments were up 11.7 per cent for the year, their steepest annual rise in 14 years.
“Unit rents are now higher than at the start of the pandemic and they are on track to surpass the 2018 record high next quarter if they continue at the current growth rate,” said the report.
“It's been a mix of supply and demand issues constricting Sydney’s rental market. On the demand side, the return of overseas migrants and international students, higher household formation and the affordability constraints of purchasing a home. On the supply side, a lack of investment activity throughout 2019-20, fewer building completions and investors selling to capture the wild pandemic price gains before they pull back further,” it said.
CoreLogic’s Quarterly Rental Review Report, noted: “This sustained period of strong rental growth has seen national dwellings record the highest annual growth in rental values since December 2008, when rental demand was supported by record levels of international migration.”
SQM Research says rental vacancy rates across the country are now at a 16-year low of 1 per cent.
SQM’s Louis Christopher said the lower vacancy rates were being driven by the reductions in household sizes, rise in short-term stay listings and return of immigration. “There is nothing yet in the data that would suggest we are about to see a reprieve,” said Christopher.
The property data firm PropTrack says the continued surge in rental costs across Sydney is making the costs associated with owning an apartment (such as mortgage repayments, stamp duty to maintenance and council rates) cheaper compared to renting over a ten-year horizon.
In its latest Buy or Rent Report, PropTrack argues: “The balance between the costs of buying and renting provided by this analysis suggests price growth will continue to be slow over the next year, and rent growth will be strong. These trends would rebalance the costs of buying and renting towards buying.”
PropTrack Economist Paul Ryan added: “While many parts to the north and east of Sydney’s CBD might appear cheaper to rent over the next decade, the majority of suburbs to the south and west appear either cheaper to buy units, or very similar in expected costs.”
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