Home prices in Sydney fell somewhat in the last quarter, but rents have not. As the housing market has risen over the past several years, renting has become more and more popular. As a result, rental prices have continued to rise, even as housing has slowed a bit. Real estate investors, both domestic and international, have been reaping the rewards of Sydney’s market and now are looking at the rental market for increased returns.
Brian Redican, a senior economist with Macquarie Bank, said potential first-home buyers were renting longer, as many investors had decided that the stock market offered better returns. This has, in turn, led to a record low vacancy rate of just 1.5% and pressure on rents to increase. The other problem is the higher housing prices in general have driven up the rental costs.
The Sydney Morning Herald indicates that average house prices in Sydney have fallen in the last quarter by 5.7%. At the same time, median rents in some districts have risen by as much as 50% since last year. Across all of Sydney, median rents rose 8.3%.
The State Government’s most recent Rent and Sales Report shows that rent on a three-bedroom house in Woollahra rose over 53%! Other areas where rents have increased substantially include Auburn and Marrickville, where one bedroom flats have risen by over 20%, and Mosman, where a two-bedroom flat has gone up over 16%. Families are looking farther and farther out for affordable housing, and even the Blue Mountains have seen rental rates on two-bedroom houses rise over 15%.
For would-be buyers, the picture is a little better. Over the past year the median price has fallen 1.4%. One area with a significant drop in price is, ironically, in Woollahra, where the median price on homes for sale is 18.8% lower than they were a year ago. Manly has also seen a drop in prices of 18.8%, while Burwood prices have dropped over 14%. Holyrod and Botany Bay have both seen smaller drops, of just over 5% in the median prices.
