The rental market started off with a bang for many properties in Sydney, especially those that were heavily impacted by Covid. However as is often the case, the Sydney rental market is segmented with different performance levels depending on property type, size, asking price and geography, and we have found that this is very much true in the current market.

This makes property updates for the ‘Sydney market’ and media articles reporting on data incorporating all of Sydney as a single market somewhat misleading as it does not apply the same to all properties.

Whilst the data shows that rental yields in Sydney have increased by 11.4% overall across houses and units to the quarter ending Dec 2022, our first hand experience has been that increases over the various properties that we manage in Sydney metro have ranged from 25% to 0%. To complete the picture, the majority of those properties that had significant increases also had significant decreases over the previous 18-30 months due to lack of demand resulting from Covid. These properties were generally those in denser suburbs, closer to the CBD or universities, and often the smaller units and apartments.

The return of net overseas migration has seen strong levels of arrivals, coupled with overseas students and the traditional Sydney peak over Summer, resulting in some of the ‘queues of tenants’ as reported in the media. We were recently asked by Australian Financial Review (AFR) to comment on the current rental market and our views on why it has tightened dramatically and its impacts on returning overseas students. Read the AFR article here:

            Inner-city rents may jump 5pc with return of 50,000 Chinese students

We see this influx of population as a temporary occurrence and expect that this segment of the market will moderate and supply vs demand will balance more in the coming quarter. In comparison, during Covid times we saw houses, luxury property and larger properties grow in popularity and rents remained stable or increased, hence these properties are seeing more moderate or limited increases now.

No market update is complete without some statistics, although please interpret these with a ‘grain of salt’ as discussed above:

CoreLogic’s Quarterly Rental Review has reported Sydney’s median rent at $679 per week (National average is $555 per week) in the quarter ending December 2022. Vacancy rates are now at 1.6% compared to 3.1% 12 months ago. Average rents jumped 11.4% when compared to December 2022. Domain’s rent report for the same period shows houses having increased 0% in the last quarter and units increasing 4.50%.

Our prediction for the next quarter ending March 2023 is a moderate increase in house rents and a strong increase in unit rents which will reflect the current strong market, with an easing in the rate of rent increase as we head into the cooler months. Look out for our next quarterly Autumn update.

Please contact us at Progressive Property anytime if you would like a rental appraisal or review or to discuss your property needs. We are a specialised property management business operating throughout Sydney metro and would love to be of assistance. We also operate closely with Freedom Funding who are mortgage brokers and are available anytime for a finance review or to discuss lending capacity. We look forward to speaking with you soon!

Sources: CoreLogic Rental Market Update Dec 2022; Domain Rent Report, December quarter 2022