Cost of Living Impact on Rental Demand

June 2024 Rental Market Update

In June, the average rental price for houses in Sydney was $1,040 per week, down 1.4% from last month but up 7.0% over the past 12 months. For units, the average rent was $697 per week, down 1.1% from the previous month but up 5.9% on a 12-month rolling average.

Vacancy rates in the Inner West are currently at 1.5%, slightly up from 1.3% at the same time last year. While this upward trend could be seasonal, it’s unclear if it indicates a longer-term change.

The cost of living and changes to temporary migration visas are major contributors to the current market dynamics. While rents are at or near all-time highs, the pace of rent increases is likely unsustainable given the financial pressures on many tenants. The general sentiment is that the growth seen over the past few years may slow down as more people feel the impact of the cost of living.

 

Wentworth Point Market Insights

In Wentworth Point, 134 properties were listed for lease in June, down 25% from June 2023 and 3.5% from May. A total of 97 properties were leased, marking a 35% decrease from last year and a 6.5% drop from last month. While enquiries are on the rise, leasing activity is not keeping pace, leading to an increased number of available properties. This has resulted in longer days on market and more competitive pricing as tenants have more options to choose from.

 

Leading local supply with fewer days on market

In a challenging market, we’re proud to keep our average days on market down to just 14.6 days, 10 days shorter than the local area average of 24 days. 

Director Johnny notes, “It’s a testament to our hardworking team and the elevated appeal and presentation that goes into each of our listings. We always have a strong marketing strategy to help landlords get the most value from their property.”

And it’s showing. The Chidiac team is proud to have 25% of the market share in Wentworth Point, building a strong database of landlords, tenants, buyers, and sellers. 

 

Rental price overview in June

In June, the average rental price was $735 per week, slightly above the yearly average of $720. The highest rental recorded was $1,750 per week for a five-bedroom house in Concord.

The increase in the average price is due to leasing more properties in higher price points, particularly two-bedroom apartments and larger. The majority of these two-bedroom apartments are in more desirable locations near the shopping centre, commanding higher rents. Meanwhile, one-bedroom apartments are the biggest contributors to the increase in supply and the slowdown in demand, as this category of apartments faces less interest. While the market appears stable, flexibility will be crucial in the coming months.

 

The cost of living driving rental demand

 

The ongoing cost of living crisis continues to affect the rental market, with many tenants opting for alternative solutions (moving back home, sharing accommodation, or seeking cheaper properties). The departure of international students at the end of their university semester has also seen an influx of one-bedroom properties command almost 50% of the available market share. 

This trend is not confined to our local area and is prevalent across Sydney. We’re seeing tenants change their priorities and circumstances and move around to suit their needs.  Johnny advises landlords to “build strong tenant relationships and be open to renegotiations and flexible lease terms to retain quality tenants.”

You can help foster long-term stability for your rental income by providing regular maintenance, responding to tenant concerns and offering flexible lease terms. 

 

End of Financial Year Tax Advice

As we approach the end of the financial year, it’s a great time to review your property investment strategy. You may be eligible to depreciate your property's value and reduce your taxable income. While most investors are familiar with the benefits of negative gearing, it's worth revisiting these strategies with your financial advisor to maximise your tax benefits and investment returns.

 

Local Development Updates

If you’ve driven down Hill Road lately, you’ll notice the upcoming Wentworth Quarter building is nearing completion. As this is a build-to-rent apartment complex, we anticipate this will create an initial oversupply of rental properties in the area with over 200 properties being added in a short period of time. 

Our team will continue to keep you informed about property renegotiations and developments to ensure you have the most up to date advice. It’s crucial to stay competitive by keeping your property well-maintained and building positive relationships with your tenants.

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