Real estate in Sydney - particularly property sales - shone throughout the pandemic, and now it is the rental market’s time to step into the limelight. Demand for rental real estate in capital cities across Australia is at a historic high, with prices nationally rising at their fastest pace in seven years, supply remaining very limited.
So just how much has rent evolved since the year began? We take a closer look at the shift 2022 has brought about for the rental market and what’s for rent in Sydney.
The new PropTrack Rental Report released in April shows the first three months of 2022 were characterised by severe supply shortages in the rental market and a huge flurry of tenant activity - both pushing rental prices up significantly.
Rental prices jumped 20% in January, and in an instant returned prices back to a pre-pandemic state, while the amount of days rental properties are now spending on the market before the right tenant is found has dropped from about 40 days to around seven (1.3%) in January. Sitting at 1.4% in March, it is currently at its lowest point since Domain vacancy records began in 2017, and down from a peak of 3.8% in April 2020.
According to CoreLogic, Australia’s combined capitals’ rental growth last year was more than 8% - the highest annual rental growth rate during the December quarter in 14 years.
Supporting this, analysis by NAB shows the rental market is tightening, with vacancy rates in all Australian states also falling during January, and rents showing the beginning of what has now become a consecutive monthly rise.
SQM Research, which monitors property markets, says Sydney’s rental vacancy rate was about 2% at the beginning of the year, or half the level of when the pandemic first hit two years ago.
For the rental properties that are vacant, competing applications from potential tenants the second they become available is now a very common occurrence, despite a rental increase of about 16%.
In some suburbs, it’s clear that tenants are willing to pay a premium for space and features necessary for their lifestyle or work from home arrangements. Also driving demand is the sharp rise in overseas arrivals as international students return again and borders reopen, welcoming permanent residents and Australian citizens are allowed back into the country.
And while this is certainly a positive environment for landlords, it is a challenge for many tenants who are finding it difficult to secure a home, or meet the cost of rising rents. Intense demand and extremely low supply mean those looking for a new home to rent are likely to face tough competition, a lack of availability, and higher rents.
CoreLogic’s Research Director Tim Lawless said rents were under extraordinary pressure, “for more than 18 months we’ve seen demand for detached housing continue unabated as more renters work from home, either on a permanent or now hybrid working arrangement, which drives demand for more spacious living conditions.”
We’re not sure what lies ahead for the rental market, but what we do know is that it is important to try and balance the needs of landlords with those of tenants, especially in a market environment that strongly favours one.
