Tenants have a closing window of opportunity to get cheaper rent, with Sydney expected to shift from a renter’s market to one favouring landlords by year end.
Renters currently have the upper hand due to a recent surge in property vacancies that left a record 3.6 per cent of all Sydney rental homes without a tenant last month, figures from SQM Research showed.
The unusually high vacancies pulled house rents down by an average 2.7 per cent over the year and unit rents by 2.5 per cent.
There were even bigger drops in median advertised rent in areas with a high concentration of new housing.
Advertised unit rents in the Kellyville-Rouse Hill area – where 8 per cent of the rental homes were tenantless – dropped nearly 10 per cent for the year.
Further north, in Box Hill, close to one in 10 properties were vacant and rents for three-bedroom houses, the main type of rental housing in the area, fell 7.2 per cent annually.
But housing experts warned these conditions wouldn’t last long because of a slowdown in new building approvals, which meant tenants would gradually have fewer properties to choose from as the year progressed.
A fifth fewer NSW homes were approved for construction in November compared to the year prior, according to the Australian Bureau of Statistics.
“Sydney still has lots of rental stock working through the system, so it’s still a tenant’s market for now,” an SQM spokesman said.
“Things will get better for landlords later in the year because the stock will eventually get absorbed and there will be less new properties available.”
He added that the December surge in vacancies was partly due to seasonal factors – landlords usually struggle to find tenants over the Christmas period and many agencies shut their doors.
Sydney has largely been a tenant’s market since 2018, when the vacancy rate surpassed 3 per cent for the first time in nearly 10 years.
Less than 2 per cent of rental properties were empty for much of the period, indicating a market where tenants had to compete hard for a low supply of listings.
Renter’s advocate Marcelle Wever said tenants’ scope to get better rental terms varied heavily by area and property.
“The best properties will still attract plenty of tenants and there will be a lot of people moving this time of year to start new jobs,” she said. “In areas with lots of construction it’s a lot different.”
Realestate.com.au chief economist Nerida Conisbee said renters would get the best deals in areas like Parramatta and the northwest, but may face more competition in the eastern suburbs and northern beaches.
“There are good deals, but you need to be in the right places,” she said.
MOST RENTAL HOMES VACANT
The Hills: 5.3%
Upper north shore: 5.2%
Sydney CBD: 4.8%
Lower north shore: 3.9%
Western Sydney: 3.9%
Source: SQM Research