Tenants have been given a rare chance to come up for air after battling the worst rental conditions in a generation.
Exclusive PropTrack figures revealed the supply of available rental accommodation in Sydney has spiked to an 18-month high, taking some heat out of the market and slowing the pace of rent rises.
It’s made Sydney – surprisingly – the major capital with the highest supply of rental vacancies.
This development has come as ABS data published this week showed lending to investors in NSW rose by about 20 per cent over the year, with the increase in landlord purchases giving tenants more choice.
Massive queues outside rental inspections may be less frequent than earlier this year. Picture: Sam Ruttyn
Rental supply remains extremely tight, with just 1.68 per cent of all rental homes available for lease, but this is up 0.51 per cent from three months ago and 0.2 per cent up from last month.
It was the fourth consecutive month in which conditions eased for renters across Australia.
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Typical rent charged for a Sydney dwelling grew 8.8 per cent over the year to July, a slowdown from the nearly 14 per cent rise in rents over 2022/23, PropTrack revealed.
PropTrack economist Anne Flaherty said the changes may seem minor but it’s the first improvement for renters in some time.
“The slight increase in vacancies has helped rents slow,” she said. “It’s still a challenging rental market. Landlords have all the power, but rents are not going up as fast as they were.”
Ms Flaherty said conditions may ease further if investor activity continues to rise.
“Many investors were cashing out of the market a year ago and the supply of rentals was shrinking. We haven’t seen a complete reversal of that trend yet, but if more investors are buying than selling it will (improve) the market somewhat,” she said.
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Ms Flaherty stressed that a dramatic increase in building supply would still be the most vital factor needed to ease the rental crisis.
“We are not building enough houses and units to accommodate our growing population and that’s the main reason rents are going up,” she said.
Figures from the Real Estate Institute of NSW showed demand for rentals declined in inner and middle Sydney in recent months, with the institute attributing this to tenants increasingly seeking out cheaper homes in outer areas.
The latest Rental Pain Index from research group SuburbTrends also revealed easing conditions for renters.
NSW saw a slight decrease in the proportion of suburbs where the average tenant was in “extreme rental pain” (measured by the proportion of their income going into rent). The proportion dropped from 72.54 per cent in June to 71.69 per cent in July.
SuburbTrends noted an “improvement in rental affordability” across the state overall, but added tenants remain “under significant pressure”.
Source: PropTrack
SuburbTrends analyst Kent Lardner said there was a large variance in rental conditions across areas.
“Emerging trends indicate a potential easing in some areas, with rental increases beginning to level out,” he said.
“However, the persistent issue of rents consuming over 30 per cent of household income remains a significant concern.
“This situation not only impacts renters but also has broader economic implications, potentially affecting household spending and overall economic stability.
“The need for targeted interventions to address affordability issues is critical to ensuring long-term sustainability in the rental market.”
article by realestate.com.au