Shocking decline in rental properties in Sydney

Sydney tenants looking for a new rental property have 62% fewer properties to choose from than at the beginning of the coronavirus pandemic.

“It's an incredibly staggering drop,” said Anne Flaherty, an economist at PropTrack.

“The fact that we've seen such a large decline in such a short period of time shows how much the market has changed,” she said.

Prop Track data released on Wednesday revealed Sydney had the steepest decline in rental properties of any major city in the country last month. The current vacancy rate is 1.2%.

A recent inspection showed long lines of renters.Photo: Sam Ruttin

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“A healthy vacancy rate is about 3%, so anything around that 1% is very competitive,” she said.

Ms Flaherty said many tenants had moved to rural areas during the pandemic, but the trend had reversed with more people returning to the city's outskirts.

Australia's population growth is also at record highs, putting further pressure on the rental market.

“Sydney is one of the busiest cities for people to migrate, and new arrivals are much more likely to live in rented accommodation,” Ms Flaherty said.

Crowds queue for a public inspection of a rental property in Bondi.Photo: NCA NewsWire / Flavio Brancaleone

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He said February was the busiest time of the year for the rental market due to increased levels of lease expirations.

“One example is international students who have transferred and are looking to start the semester in time,” she said.

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Availability remains limited as new inventory is not coming to the rental market.

“In 2023, new home improvements fell to their lowest level in 10 years,” Ms Flaherty said.

The area with the lowest number of available rental properties was the Shire with a vacancy rate of 0.65 per cent, followed by the Northern Beaches at 0.73 per cent and the eastern suburbs at 0.9 per cent.

A two-bedroom villa in Sutherland is currently available for rent for $720 per week.

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“A vacancy rate of less than 1 percent means there is very little inventory available in the area, so landlords can set their own prices,” Flaherty said.

Median rents in Sydney will rise by 16.7% in 2023 to $700 per week.

Investor activity has also slowed since the pandemic began, as many investors exited the market.

High interest rates are also deterring investors from buying, but Flaherty said first-home buyers could make a comeback in 2024.

“I think there will be a group of renters who will be in a position to buy…The cost of a mortgage will be the same or less than renting, but of course property prices are also more expensive. So first-time home buyers , they need to be more compromising about what they want in a property,” she said.

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