Sydney Rentals Increasingly Unaffordable
Australia’s rental sector is surging in costs and is set to worsen, supercharged by overseas migration, inflation, and chronic supply shortage. Rental prices are up 30% over three years after the pandemic, and it’s an impossible situation in major cities like Sydney. This means renters will either place more monthly repayments to rent or move to more affordable areas.
What’s in store for Sydney renters? Let’s find out:
Sydney Rentals May Have Double-Digit Percentage Hikes
The whole country’s rental crisis isn’t going anywhere, with recent reports showing renters fighting for available supplies. The national vacancy rate is at a record low of 1.06% which pushes prices, especially in big cities.
It’s an untenable situation because nearly six in 10 lower-income households put more than 30% of their weekly income on rent, as reported by the Australian Bureau of Statistics (ABS).
Sydney is among the cities that could experience more double-digit percentage rental increases, with the majority of migrants preferring areas like Sydney and Melbourne. Six of the whole country’s most expensive postcodes are actually in NSW, and the state has been the least affordable location since 2017.
Still, historical data indicates that approximately 30% of migrants choose Sydney as their destination, with the specific influx of international students. In fact, data from InvestorKit states that about 218,810 student visa holders moved to NSW in April 2023.
More migrants mean more problems in the housing supply. Recent assessments suggest that vacancy rates in Greater Sydney hover around 1.1%. However, there are only 2.44% of newly approved residential construction projects in the area, which contributes to the rental price hikes.
Peak Rental Prices Mean Affected Residents
As interest rates are expected to rise until 2024, this will push the variable rate mortgages of landlords. For many landlords who are private investment property owners, they in turn will be pressured to raise rents further to accommodate mortgage increases.
Amid the impossible prices, many tenants are being priced out of Sydney homes. House rates show about $775 per week on detached homes and over $680 per week for units.
Still, there are certain suburbs within NSW that provide lower median rental rates. Homes in areas like Auburn, South Granville, Granville, and Sefton in Parramatta were 15% cheaper than the city median home price.
For rentals, look at suburbs in Berala, Wiley Park, Punchbowl, Lakemba, and Regents Park in Parramatta and Inner South West, respectively. Apartments in these areas were 27% lower than the median rental price.
What’s notable about these locations is that they are 20 km away from the CBD and are within a comfortable commute distance to major centers. If you are looking to rent closer than 15-20 km from the city, it’d be a Herculean task to find something that’s not too pricey.
From an investor and a renter perspective, knowing which Sydney suburbs still have wiggle room is crucial. Explore the western part of the city for rental possibilities.
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