The lower north shore has had the biggest slide, with median weekly rents down $100 to $1000 over the past year, according to the latest quarterly Domain Rental Report released on Thursday.
The 9.1 per cent fall is the steepest since Domain records began in 2004.
Some pockets of Sydney have experienced heavy price falls. Photo: Jessica Shapiro
Across the city, the median asking rent for houses remained flat at $550 for the seventh consecutive quarter. But for the first time since 2004, the median asking rent for units rents dropped year-on-year to $545, leaving renters $5 better off.
“Those Sydney regions that were overexposed to investors will be more prone to rental price decreases,” said Nicola Powell, Domain senior research analyst.
“That’s already unfolding in the lower north where there is a high level of tenants and they have seen significant rent declines.”
Dr Powell said a record 43,980 units were advertised – an annual increase of 23.3 per cent – with more than one-fifth of that new stock, leaving renters spoilt for choice.
Median weekly asking rent: houses
| Source: Domain | ||
| REGION | QOQ | YOY |
| Blue Mountains | 0.0% | 4.7% |
| Canterbury Bankstown | 0.0% | 0.0% |
| Central Coast | 0.0% | 1.7% |
| City and East | -4.8% | -4.8% |
| Inner West | -3.2% | -1.9% |
| Lower North Shore | -4.8% | -9.1% |
| North West | -2.4% | -4.7% |
| Northern Beaches | -3.1% | 0.0% |
| South | 0.0% | 0.0% |
| South West | -1.1% | 0.0% |
| Upper North Shore | 0.0% | 0.6% |
| West | -1.1% | -1.1% |
“Even though rents remain flat [in some pockets], landlords will think twice about raising rents. Tenants will find they have the upper hand,” said Dr Powell.
“Landlords are, perhaps, enticing tenants in other ways by offering discounts or they’re going to certain lengths to retain and attract tenants.”
National director of property management at The Agency Maria Carlino said many landlords were not taking the market changes well.
“They would prefer to keep [their rental properties] empty rather than have to drop asking rents” said Ms Carlino.
Ms Carlino said other owners were prepared to keep up with neighbouring, brand new apartment competition.
“They need to be doing more than just putting a coat of paint on. We’ve found owners are prepared to spend $40,000 to $50,000 to have [properties] modern and to have them leased.”
Ms Carlino said agents and property managers had their work cut out for them too because it was no longer a matter of “just turning up and turning a key”. Instead they were building a relationship with tenants to offer them different rentals when they were shopping around.
“We’re being on the front foot to service not only the owners, but the tenants as well,” said Ms Carlino.
Median weekly asking rent: units
| Source: Domain | ||
| REGION | QOQ | YOY |
| Canterbury Bankstown | -3.4% | 0.0% |
| Central Coast | -2.7% | -2.7% |
| City and East | -1.5% | 0.0% |
| Inner West | -1.8% | 0.0% |
| Lower North Shore | 0.0% | -2.4% |
| North West | -2.0% | -3.8% |
| Northern Beaches | -1.2% | 0.0% |
| South | 0.0% | 4.0% |
| South West | 0.0% | 0.0% |
| Upper North Shore | -1.8% | 0.0% |
| West | 0.0% | -1.5% |
Margaret Woo, head of property management at Ray White Lower North Shore, which has about 1500 rental properties on its books, reported a particularly tough rental market.
“We virtually have to drop rents straight away to get people through the house compared to this time last year,” said Ms Woo.
She said rent increases in the past few years were “out of control” and it was now more common for tenants to negotiate prices, as well as breaking leases to move to cheaper rentals too.
Economist Stephen Koukoulas suggested rental affordability may be improving if wages were increasing by two per cent annually while rents remained flat for the past 18 months.
He said investors rushing for the exist could compound the house prices downturn.
“People who bought a long time have a bit more equity and can sit tight … but for the more recent investors … if it’s harder to rent out your property, then the maths doesn’t add up.”
article by www.domain.com.au