Sydney unit rents have reached a record high, with the median asking rent at $780 a week in the September quarter, according to Domain’s latest Rent Report, released on Thursday.
The median held steady over the quarter but was up 4 per cent, or $30 a week, over the year. House rents edged lower, falling 0.6 per cent over the quarter to a median of $835 a week, though they were still up 5.7 per cent, or $45, over the year.
Sydney’s rental vacancy rate rose slightly over the quarter to 1.2 per cent, remaining well below the 3 per cent rate that generally indicates a balance of power between landlords and tenants.
Domain’s chief of research and economics, Dr Nicola Powell, said the price and vacancy data showed renters were “reaching the limits” of what they could pay.
“A low vacancy rate, like the one we have in Sydney, usually translates into rapid rent increases, but that’s just not happening right now. It tells us a lot about affordability ceilings being reached,” she said.
Powell said it was plausible that the May budget’s changes to negative gearing and capital gains tax would prompt investors to exit the market, reducing rental stock and causing asking rents to rise. “The data is not showing that effect yet, but this is the first full quarter since the budget,” she said, citing the tax changes as well as interest rate rises and the expectation of another hike before the end of the year as pressure points on investors.
The steepest rise in unit rents over the quarter was in the inner south-west, up 2.9 per cent to $700 a week. For houses, the only rise was in the south-west, up 2.6 per cent to $780 a week.
Leo Patterson Ross, chief executive of the Tenants’ Union of NSW, said the flat quarter was welcome but doubted it would continue, noting the September quarter is traditionally the quietest in Sydney because of lower student turnover.
“These results could partly reflect that, rather than a meaningful moderation in prices,” he said. Patterson Ross said many tenants contacting his organisation were approaching “breaking point” after two years of rent increases that outpaced wage growth.
“They’re compromising in various ways, whether that’s a smaller place than they’d want, a place further away from where they want to be, or a place in poorer condition,” he said.
Sydney renter Julian Robinson, a 28-year-old disability support worker, said he and a friend were inundated with applications when they advertised for a third flatmate at a converted church in Dulwich Hill. Robinson said he received 150 messages almost immediately, including from many international applicants.