Well what a difference in the Sydney residential sales market from last quarter! Following on from the surprise election result, 3 successive interest rate drops and loosening credit policy – confidence is well and truly back in the market. This has led to not only owner occupiers back in the market but also more property investor interest coming back. August 2019 posted the first month on month rise in the Sydney market since October 2017.
What does this mean for the Sydney rental market? It has actually continued the downward pressure on rents. This is attributed to the supply of newly developed product (mostly highrise apartments) continuing to hit the market, First Home Buyers leaving their rentals to purchase their own properties and investors purchasing to rent out.
There are many parts of Sydney where rental supply outweighs demand and hence resulting in falls in asking rents of around 5 – 15%. These falls are not only in suburbs with newly developed apartments, but the flow on effect has also impacted other more established suburbs as tenants look to upgrade. We forecast this trend to continue in the next few quarters before supply restricts due to recent lack of development in Sydney.
Rental vacancy rates currently sit at 2.7% for Sydney houses and 3.3% for Sydney units. While the vacancy rates for houses as remained relatively stable, units have increased their vacancy by about 10% since September 2018.
Sources: CoreLogic Housing Market Update; Rent.com.au Rental Market Snapshot; Realestate.com.au Property Outlook