Decreasing demand and increasing supply are pushing up vacancies in Sydney, but it is still the most expensive rental market
Sydney’s downward slide shows no signs of stopping, but while prices continue to fall, this capital city’s rental market is in a rather interesting position.
According to CoreLogic’s Quarterly Rental Review for March 2019, Sydney remains the most expensive capital city rental market, even with the recent declines in rents. The median rent per week comes in at $582, a full $32 above that of second-placed Canberra.
The report acknowledges the mixed nature of the rental market. However, with Sydney accounting for such a significant percentage of combined capital city rentals, its decline has pulled down overall performance across Australia. The report explains that Sydney, like Melbourne, is seeing the impact of high demand from investors in recent years, and the corresponding increase in apartment supply, much of which was purchased by investors.
The Residential Vacancy Rate Report published by the Real Estate Institute of NSW (REINSW) in March 2019 supports these findings, pointing out that vacancy rates have increased across the metro and in the outer-ring areas.
“The vacancy rate in Sydney’s inner ring – areas such as Ashfield, Leichardt and Marrickville – increased in March due to lower demand and high supply,” says REINSW president Leanne Pilkington.
“Sydney’s outer ring is also experiencing a similar situation. Feedback from real estate agencies in areas such as Baulkham Hills and Blacktown has been that old, dated units are harder to lease for the same price they had been getting previously, and landlords are unwilling to drop rental prices.”
By contrast, business appears to be picking up in the middle-ring pockets, where landlords are more open to negotiation.
“Sydney’s middle ring is experiencing a decline in vacant properties. According to real estate agencies in areas such as Strathfield and Parramatta, landlords have been willing to reduce rents to attract tenants,” Pilkington says.
Job creation on Sydney fringe
There certainly won’t be a shortage of tenants, with the job opportunities available on the fringes of the metro.
“Automated trains on the upgraded train line to Bankstown will reduce congestion and commuting time to the CBD, sparking a development boom in the area. The line may also be extended to Liverpool in the future,” says propertybuyer CEO Rich Harvey.
“This will be supported by the redevelopment of Bankstown Airport that will support 2,000 jobs once complete.”
SUBURB TO WATCH
JINDABYNE: Gateway to the ski fields
Tucked into the Snowy Mountains, the suburb of Jindabyne is an exciting tourist destination all year round. Visitors come here to enjoy outdoor activities ranging from skiing and snowboarding in the winter to horseback riding and mountain biking in the summer.
Its popularity isn’t just with holidaymakers though – property values have been on the rise for about a decade and are still heading upwards. In the five years to March 2019, house prices went up by a whopping 83.7% to hit a median of just under $600,000. In the same period, unit values shot up by 67.2%, but the market remains quite affordable at a median of less than $350,000. Unit rental returns are solid at an average of 5.3%.
Tourism: Jindabyne is a holidaymaker’s haven in both the summer and winter months
Affordability: The median unit price in Jindabyne is a relatively low $334,032