Sydney rental market sees some prices surge over $30K annually

• Inner city rents are experiencing significant annual increases
• Tight supply and surging immigration contribute to rising rental prices
• Rental markets are tight nationwide, with limited relief in sight

An exceptionally tight rental market is putting renters under extreme pressure, with rents jumping by as much as $32,500 annually in some suburbs, according to new PropTrack data; the strong demand in certain inner city areas amounts to a weekly increase of over $600.

Sydney’s Rose Bay has seen the biggest jump in rents in the past 12 months, up $625 per week, followed by Vaucluse at $500 per week.

Clear Island Waters in Queensland has also seen a big jump, increasing $400 to sit at $1,400 per week.

Rents are also lifting for units, particularly in inner-city areas. The suburbs where units have risen the most include Haymarket NSW ($210), Main Beach QLD ($200) and Darling Point NSW ($200).

Huge demand

PropTrack Economist, Angus Moore said low supply and huge demand have seen rents in inner city areas rebound.

“We are seeing pretty brisk growth in rents, particularly in inner city areas which do tend to be more expensive.

“That’s in stark contrast to what we were seeing during the pandemic, particularly in inner-city Sydney and Melbourne.”

“To put it in context, inner city Melbourne rents fell by as much as a quarter, across the first 12 to 18 months of the pandemic.

“That’s clearly not what we’re seeing at the moment.”

Strongest annual increase in rents, Houses

Source: PropTrack.

Strongest annual increase in rents, Units

Source: PropTrack.

Back above pre-pandemic levels

Moore said rents are now higher than they were pre-pandemic with the inner city areas seeing an incredibly quick catch-up.

“We are now seeing very tight rental markets and that’s contributing to rental growth.”

Moore said rental markets are just extremely tight across the country at the moment and it’s no longer isolated to particular pockets.

“There are not very many rentals available and very strong demand for homes to rent and that means we’re seeing very, very quick growth in rents.”

Angus Moore, PropTrack Economist

He said the surge in immigration is adding to the rental pressures in the inner city areas.

“We know from census data that recent migrants do disproportionately live in inner city areas, which makes sense as it’s often where jobs are located, transport hubs are located and crucially universities are located.”

“We would expect that to be kind of more of a tailwind in inner city areas than in, for instance, regional areas.”

Rental vacancy rates, National

No relief in sight

According to Moore, there is very little relief for renters in these inner city locations any time soon.

“Vacancy rates are very low, right across the country, which is going to continue putting pressure on rents.”

“But there may be a silver lining for renters in that we are starting to see a bit more investor activity in the market, particularly compared to what we were seeing during Covid.”

“We’re also seeing fewer investors selling out than we were during Covid and that means that the number of rental properties is starting to grow again and grow faster than what we have been seeing.

Moore said more investors are going to help improve the availability of rentals and start to take some pressure off rents, but, it’ll take some time to have an impact.

“The number of new rental properties in any month is pretty small relative to the total size of the rental market.

“So it’s an adjustment that’ll take a while, unfortunately.”

Asking rents, National