By Elizabeth Redman and Melissa Heagney
Sydney rents have risen to a record high and tenants are forking out $50 a week more than they were a year ago for the median house.
Released on Thursday, the Domain Rent Report for the December quarter shows asking rents rose 9.1 per cent to $600 a week for the median Sydney house over 2021 – a rise of 3.4 per cent in the past three months.
A search for more space to work from home during lockdown prompted the rise, with apartment rents rising at only half the pace of houses – up 4.3 per cent in a year, or $20 a week, to a record median of $490.
Sydney’s rental market is the second-most expensive in the country, topped only by Canberra, despite last year’s lockdown and its associated job losses.
Tenants are in a race for space and have been placing greater importance on their homes due to lockdown, Domain chief of research and economics Nicola Powell said.
“It’s been two years we’ve been living through restrictions and ever-changing conditions. We’ve seen many people upgrade their rental property,” Dr Powell said.
“Many of us are working from home, still and people are willing to pay more and pay that premium.”
But it’s a grim picture for essential workers or lower-income households and Dr Powell said such renters could face compromises such as longer commutes.
Once international border rules ease further, a return to high levels of immigration could place added strain on the rental market, she said.
Last year’s rent increases were even steeper in sought-after neighbourhoods near water.
Eastern suburbs house rents soared 15.6 per cent in a year to $1150, while northern beaches houses clocked the same median price after a 16.2 per cent rise, and Central Coast houses rose 15.2 per cent to a median $530.
AMP Capital chief economist Shane Oliver said rents have historically tended to rise after house prices rise, although not in perfect relationship.
“A deterioration in housing affordability tends to lead to a deterioration in rental affordability,” he said.
If the rate of immigration increases, it could initially push up unit rents, although not house rents, he said, but he warned a 9 per cent annual rent increase was not sustainable for Sydney and reflected the distortions of the pandemic.
Westpac senior economist Matthew Hassan said the results were “surprising” in the context of limited migration, but said one demand driver could be homeowners completing renovations and renting until the work is finished. Home improvement has boomed in the pandemic, spurred on by the government HomeBuilder grant.
Sydney’s economy has also been less interrupted compared to Melbourne’s six lockdowns, keeping people in work. Melbourne house rents rose only $5 a week over 2021.
“There’s a bit of a cumulative result for Sydney in terms of fewer interruptions to the economy and activity from lockdowns,” Mr Hassan said.
Dulwich Hill renter Joel Murray has been trying to move for 18 months as prices rise.
When prices fell as international students left the country during lockdown one, the community health worker, who uses they/them pronouns, was caught without the cashflow to take advantage of the discounts and then got stuck watching prices rebound.
“There’s not much stock available and when stock becomes available it’s either too expensive or it’s accommodation at a really low standard of living,” they said, adding some places were snapped up too fast to get to an inspection.
“I’m already in a basic unit with no air-conditioning, no heating, no dishwasher.”
They would face a steep deposit hurdle to try to buy in Sydney’s expensive property market.
“I don’t have the option of the Mum and Dad Bank. I don’t have the option of going home and living with my parents in Albury to save on rent,” they said.
Joel Dignam, executive director of tenant advocacy group Better Renting, said rent increases were bad news for people who needed somewhere to live, especially if their wages were not growing much, and called for better protections against evictions and steep rent increases.
“I think it’s really scary, firstly for people who are currently renting who are worried about getting a rent increase,” he said.
“It’s tough for people who are looking and may have to move further afield.”
BresicWhitney head of property management Chantelle Collin said the market had been inconsistent throughout the year of changing restrictions, with strong tenant demand for houses but less interest for smaller one-bedroom apartments.
Features such as home offices, natural light and balconies were highly sought after, she said.
Open for inspections are now well attended and tenants are getting their applications in quickly and at the asking price.
“They ask the question, ‘is the rent negotiable?’ But then they see the competition and they put in their application at asking [price],” she said.
article by smh.com.au