Sydney rental yields
Sydney (postcode 2000) rental yields have been declining for 10 years. Red Highlight added. Source – SQM Research.
  • Sydney (postcode 2000) rental yields have been below 4% since 2015
  • They moved around erratically in 2020 but may be showing signs of bottoming
  • Listings were below 500 until the pandemic, then hit 1,250, are now back to 600

After a decade-long decline in gross yields, returns from Sydney rental properties may be showing signs of bottoming out, according to the latest charts from SQM Research.

Back in 2010, returns for the harbour city’s houses and units was hovering around 6%. At the time the cash rate (RBA’s underlying interest rate) was just under 5%.

As interest rates have fallen, to historical lows of 0.1%, so rental yields have followed. After 2013, the rental yield started turning south and has been below 4% since the middle of 2015.

As the pandemic hit in the first quarter of 2020, so yields took another dive to around 2.5%, but have been crawling their way back to 3% and 3.5% since the middle of last year.

The only exception to this was what happened in the 3-bedroom rental housing market, which went that other way during the pandemic spiking to 5% before falling back to under 4% in the early months of the new year.

Meanwhile, the number of rental listings varied wildly during 2020. Pre-pandemic, there had been less than 500 rentals available on the Sydney market (postcode 2000), but this jumped to 1,250 as the virus hit. It has been steadily retreating back to around 600 today.

Sydney rental listings
Sydney rental listings 2011-2021, red trend lines added. Source – SQM Research



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