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Sydney tenants are facing record high house and unit rents as low rental vacancies drive up competition and prices for homes.
House rents jumped $30 per week to a record median of $650 over the September quarter, new figures show, while unit rents increased $25 to $550 — returning to the record set in 2018, the Domain Rent Report for the September quarter, released on Thursday, shows.
Sydney rents are at record highs.Credit:Peter Rae
However, rents fell or held steady in some areas, as the rising cost of living weighs on household budgets, and lifestyle changes seen earlier in the pandemic start to reverse.
House and unit rents each climbed 4.8 per cent over the quarter, the data shows, and were up 14 per cent and 14.6 per cent, respectively, over the year. It is the largest annual increase in unit rents on Domain records which go back to 2004, and the largest jump in house rents since 2009.
Domain chief of research and economics Dr Nicola Powell said Sydney was a landlord’s market with a record low rental vacancy rate of 1.1 per cent in September.
The return of skilled migrants and international students had added to already strong rental demand, which increased as more tenants sought to live on their own during the pandemic and soaring property prices left hopeful home buyers renting longer, Powell said.
Rental supply was affected by weaker investment activity, building completion delays and landlords moving properties to the short-term holiday rental market.
“Overseas migration and short-term arrivals are still below pre-pandemic levels, so you have this stream of demand that is going to rise at a time when vacancy rates are at a record low, so that dynamic is going to create pain for tenants,” Powell said.
Affordability constraints were pushing more tenants to apartment living, and more affordable areas, Powell said, while demand had eased in lifestyle locations that had seen extreme growth.
Units in the Parramatta region and the city and inner south, harder hit by border closures, recorded the largest increases, up more than 8 per cent each over the quarter.
Meanwhile, house rents fell on the northern beaches (-3.8 per cent), and north shore (-1.4 per cent). Rents in all regions were up year-on-year.
AMP Capital chief economist Dr Shane Oliver said the collapse in rental vacancies was pushing up rents.
“It’s probably going to take some time before it gets better because the supply of property will take time to catch up,” he said.
Rental demand could ease as more tenants look to shared accommodation or stay with family as economic conditions deteriorate, Oliver said, but this could be offset by rebounding immigration levels. Ultimately, rents would hit an affordability ceiling.
The rent on Maggie Sewell’s three-bedroom shared unit lifted $50 earlier this year, but she decided to stay put given the competitive rental market.Credit:Rhett Wyman
Bellevue Hill tenant Maggie Sewell stayed put when the rent on her three-bedroom unit rose by $50 to $900 per week earlier this year, and sought two new housemates to replace those moving out.
“I’d heard it was really mad out there … so it didn’t seem worth it, when I may have ended up having to move to somewhere more expensive,” the 23-year-old student said.
“When we [advertised a room] on Facebook we had so many requests … I think it’s still pretty dire out there, and I think it’s getting stupidly expensive.”
Sewell’s friends in neighbouring suburbs were paying much more. She hoped further rent rises would be limited, but knew the eastern suburbs would always be more expensive than other regions.
Tenants’ Union of NSW chief executive Leo Patterson Ross said renters were struggling to afford increasing rents and energy costs. Some were staying in poor quality homes, while others were pushed into homelessness and the level of renter distress was much higher than in the past.
“[More] people are calling about things like “no grounds’ evictions and rent increases,” he said. “We’re getting calls … from people facing a 20 or 30 per cent rent increase.”
Patterson Ross said a lack of affordable, well-located homes was the fundamental issue, and called for all political parties to head to next year’s state election with solutions.
Ray White’s chief executive of property management Emily Sim said some heat had come out of the rental market in recent weeks and fewer tenants were making offers above advertised rates.
Sim said rising rents, energy costs and an uncertain economic outlook were affecting what tenants were prepared to pay. Share houses were coming back with a vengeance, but even a single room could cost $300 to $400.
“If we’re not an affordable tipping point now, I think people are at least starting to get concerned that they’re getting too close to the sun,” she said.
A previous version of this article misstated Maggie Sewell’s age. She is 23. 
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