Sydney tenants are facing sky-high housing costs, with rental prices in some suburbs increasing hundreds of dollars a week over the past year.
Median house rents in four in 10 Greater Sydney suburbs jumped at least 10 per cent over the year to June, according to the Domain Rent Report for the June quarter, released on Thursday. The largest increases were in the city’s east, northern beaches, upper north shore and Central Coast.
Vaucluse had the biggest jump as its median asking rent rose 51.5 per cent, or $850 per week, to $2500. Fairlight, Dover Heights, Erina and Roseville were also among the top 10.
It comes as Sydney’s median house rent reached a record $620, and unit rents hit $525 after their steepest annual increase in 14 years. More than 90 per cent of suburbs analysed recorded higher house rents than a year ago, while more than 80 per cent had unit increases, at the same time as many tenants are facing rising prices for petrol, heating and groceries.
Point Piper and Dover Heights had the largest unit rent hikes, up 23.7 per cent and 19.2 per cent, respectively. About one in eight suburbs had apartment rent rises of at least 10 per cent.
Domain chief of research and economics Dr Nicola Powell said rent rises were sharpest in coastal and lifestyle locations that had attracted higher demand during the pandemic, as tenants sought out larger homes and desirable locations amid the rise of remote working.
There has been an increase in home owners renting temporarily after selling, in hopes the property market would cool, Powell said. Rental stock had also reduced as some landlords cashed in on the booming sales market.
Powell noted some of the largest changes were in smaller rental markets, where a change in the quality of homes advertised for rent could affect the median more.
Jerome Srot, director of property management at The Rubinstein Group, said a lack of supply and increased demand from returning expats had pushed up prices in Vaucluse and Dover Heights, as had more demand from those renting temporarily between selling and buying.
A handful of high-end rentals had likely skewed the suburb medians higher, he said, and rent rises had more commonly been up to about 20 per cent.
Demand for larger houses fuelled rent hikes in Roseville and Turramurra, up about 29 and 24 per cent respectively, said Luke Curran, head of property management at Ray White Upper North Shore.
Desirable school catchment zones, an increase in returning expats and new arrivals, and investors cashing out of the market, also had an impact.
“It’s definitely a landlords’ market,” he said, but noted some owners had aimed too high and had to reduce rents.
ANZ senior economist Felicity Emmett said the low vacancy rate was putting pressure on prices, and there could be more pain to come for tenants, with the return of immigration to further boost demand, and some landlords likely to pass on the cost of rising mortgage rates. Lower building approvals would also impact levels of new supply in future.
“It’s really hard to see the situation easing in the rental market,” she said.
A desire for more space in the pandemic had driven demand for larger homes, Emmett said, but also prompted renters to move out of larger share houses to live with fewer people or alone. Sky-high property prices had left more people renting longer.
Living solo was out of the question for inner west renter Sophie Chant. She saw 20-plus tenants at most open homes, lower-quality properties still commanding sizeable sums, and some renters offering more than the advertised rate.
The 26-year-old, a social media co-ordinator for real estate agency Ray White, searched for about a month, then had a friend seeking a roommate for a two-bedroom, two-bathroom Forest Lodge apartment, which they rent for $770 per week.
“It’s easier to share in this kind of market, the cost of living is so expensive,” she said.
“I had considered getting my own place … but I wasn’t willing to sacrifice all that money for a one-bed apartment, you can rent a studio and it can still cost you $450.”
The suburb’s median unit rent jumped 10.5 per cent over the year to $580, but is still lower than it was five years ago.
House rents fell in a handful of neighbourhoods including Bellevue Hill, Bronte, Manly and Freshwater.
Cunninghams head of property management Trent Docherty said demand on the northern beaches had quietened over winter, and rents for some top-end properties had pulled back, after strong growth earlier in the pandemic.
The premium that households had been prepared to pay last year when they were working from home and spending less on holidays had pulled back, he added.