Property investors in Sydney are reaping the rewards of the tight residential rental market, with some suburbs recording almost 30% rental increases in just three months.
The NSW Department of Housing Rent and Sales report, which covers every Local Government Area (LGA) in the state, showed that more than half of Sydney’s LGAs racked up double-digit increases in median weekly rents in the 12 months ending March.
Rental properties in each of Sydney’s inner, middle and outer rings saw an increase in median weekly rents of $10 over the quarter, upping their rental figures to $430, $360 and $300 respectively.
For the outer ring – which includes the Blue Mountains LGA – this represented a rise of 3.4%, while the middle ring – which includes Manly and Parramatta – rose by 2.9%, and the inner ring – which includes Sydney and North Sydney – rose by 2.4%.
The median weekly rent rises over the last year were in double figures for all three rings, with the inner ring rising by 11.7%, the middle ring rising by 12.5%, and the outer ring rising by 11.1%.
This represented an annual increase in median weekly rents of $45, $40 and $30 for the inner, middle and outer rings respectively.
“While there’s this void of rental properties, rent will only go one way – and that’s up. Properties that were receiving $300 per week in rental income are now seeing offers of up to $350,” said Real Estate Institute of NSW president Steve Martin. “Rents are expected to increase in excess of 10% pa until some sort of rescue package is put in place. We need government incentives to bring property investors back into the market.”
Rental hot spots
Canterbury and Marrickville were very popular among tenants looking for units, as both recorded annual rent rises nearing 20% in both the one- and two-bedroom unit categories.
Marrickville recorded annual rises of 18.2% for one-bedroom dwellings and 17.9% for two-bedroom units, while Canterbury saw rises of 17.6% (one-bedroom units) and 19% (two-bedroom units).
Marrickville also saw an annual double-digit rise of 16% in median weekly rents for two-bedroom separate houses, with Parramatta (19.6%) and Fairfield (25%) also seeing remarkable increases in the same category.
Median weekly rents for three-bedroom separate houses in Sydney’s SD saw healthy growth over the last 12 months, with rents rising by 23% in Ku-ring-gai, 22.9% in Leichhardt and more than 10% over half of the area’s LGAs.
The prime suburb of Woollahra racked up an impressive 28.3% increase in median rent to $1,925 for a four-bedroom dwelling in the three months to March, while the outlying suburb of Cessnock achieved a healthy 20% growth to $300 year-on-year.
“There’s an acute shortage of rental accommodation in Sydney and NSW, and as a consequence rents are increasing dramatically,” said Martin.
“Last year a lot of investors sold their rental properties and cashed in on superannuation. These properties were bought by owner-occupiers, reducing the vacancy factor to less than 0.7%.”
