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Tuesday, 15 January 2019

Sydney a tenant's market

New rentals ahoy

Sydney's apartment pipeline is now shrinking after its multi-year boom, but in the meantime there is plenty of new stock for tenants to choose from.

December is a seasonally weak month for the rentals market for obvious reasons, but Sydney had around 25,000 rental vacancies around Christmas according to the latest SQM Research figures, for a vacancy rate of 3.6 per cent (well up from 2.6 per cent for the prior corresponding period). 

Sydney's population is growing fast, but it's always going to take time to digest such a high level of rental supply coming all in a rush. 

At the sub-regional level, rental vacancies are especially high in the supply-responsive zones, such as within the Hills District of Sydney.

Source: SQM Research

Some of the suburbs where landlords are really likely to struggle have been flagged here often enough before, including as Wentworth Point (8.3 per cent vacancy rate in December). 

Despite the high level of supply unit asking rents increased in Sydney over the month. 

At the other end of the spectrum Hobart (0.4 per cent) had but a hundred or so vacancies, while Adelaide, Brisbane, and Perth have consistently seen vacancy rates lower than a year earlier, so these markets are tightening.

Melbourne will be interesting to watch in 2019, particularly as the first quarter of the year is likely to see a seasonal summer surge in Australia's estimated resident population of about 125,000, with most of the new arrivals heading to Sydney and Melbourne (in that order), before accounting for interstate movements.