September 8, 2023
Rental Prices in Sydney Real Estate
Amidst a massive cost of living crisis, many Australians are feeling the pressure of rising housing costs. With housing affordability at its worst level in three decades and Sydney housing now more expensive than New York and London, many prospective home owners are being forced to rent. However, with rent prices rising for almost three consecutive years, many are wondering if this constant growth can continue. In the last 12 months especially, Sydneysiders have been subject to surging rental prices in inner city suburbs, with population growth and low vacancy rates driving prices higher and higher. However, it seems there may be an end in sight that could see rental prices fall.
We will be exploring the suburbs in Sydney that have risen the most over the last 12 months, those that have fallen, and what the future holds for renters in New South Wales.
Sydney Residential Real Estate Market
Discover more about the state of residential real estate in Sydney, how the market may change, and what we can expect to see from real estate Sydney in 2024.
Across metropolitan Sydney suburbs, house and unit prices alike have been soaring, with many tenants struggling to cope with steep increases. Recent data highlights houses in Parramatta and Constitution Hill both seeing 18% increases in median weekly rent over the last 12 months. Inner city suburbs have also seen a substantial increase, with houses in Waterloo and Darlinghurst increasing by 17.9% and 17.6% respectively. Units in Sydney, however, have been subject to the biggest increase in unit prices, with Millers Point, Tamarama, and Chippendale units all increasing by over 29%.
|Median Weekly Rent
|12 Month Change
Driven by a booming population in Sydney and a lack of new homes being built, in many suburbs in Sydney, rising rent prices are outpacing wage growth. Renters are faced with the prospect of moving further into suburbia or are forced to absorb rising costs by paying a higher percentage of their income on housing. With the population forecasted to continue growing, rental costs are unlikely to stop rising anytime soon.
Despite rising rents in Metropolitan areas in Sydney, regional areas in NSW have experienced falling rental prices, with some suburbs ranging between 6% and 7.5%. This trend may expand to major cities in Australia including Sydney, and it is possible that rent growth will slow in 2024, and maybe level out entirely. Rents tend to move in line with interest rates, and as interest rates may fall next year, we may see an increase in demand from property investors that could add more properties to the rental supply. Additionally, as incomes aren’t rising in line with the cost of housing, we may see an increase in household sizes that fell during COVID-19 as home-owners and renters alike sought more space. An increase in household sizes could bring additional properties to market that could help lower rental prices.
Finally, as renters are spending a higher share of income to service new rents – as high as 30.8% in March 2023 – it is possible that we may reach a ceiling on rental prices.
Changes in Sydney Residential Real Estate
Sydney’s rental prices have been soaring due to population growth and low vacancy rates, especially in inner city suburbs. With substantial increases in both house and unit rents, some areas have experienced rent hikes of almost 30%. Rising rents are outpacing wage growth, causing concerns for renters, however there may be hope on the horizon.
As the Sydney property market continues to evolve for renters, it is important to stay informed about current conditions so that you can make the best decisions. Whether you are looking at renting or to take the plunge to purchase a property in Sydney, we can help. We are Sydney-based property developers with a focus on creating high-quality residential developments and commercial developments. HYG has a strong track record of success, having delivered a number of award-winning projects across Sydney.
Whether you are looking to buy or your dream home or researching the right property type to rent, get in touch with our knowledgeable team today.