Average rents fall in two-thirds of Sydney suburbs
For almost two decades, Sydney property investors have been in the fortunate position of having average rents increase due to supply constraints. However, with Sydney’s vacancy rate above 3.5% and the average time on market now stretching to 37 days, landlords are finding that tenants now have the upper hand.
According to data from Domain, rents have fallen in two out of every three suburbs this year, with that number increasing to seven out of 10 for apartments. Many landlords are finding that when they have requested increases to rent at the end of a lease, that they have been rebuffed by tenants who are well aware of the state of the rental market.
In fact, a number of tenants have requested rent reductions. This has left some landlords with the prospect of accepting a lower rent, or having their apartment vacant for a period of time with no guarantee that a new tenant will be able to be found willing to pay the higher asking rent.
Whilst rents have fallen across Sydney by approximately 5%, there are huge variations on a suburb by suburb basis – with average rents in some suburbs down by almost 25%. Interestingly, a number of exclusive blue chip suburbs have seen the biggest rental price drops, including Millers Point (-21.4%), Bellevue Hill (-20.1%), Dover Heights (-15.6%) and Coogee (-10.6%).
The dramatic price falls in these suburbs indicates that it is not just the suburbs where there have been huge increases in housing supply that are experiencing falling rents. There are other factors at play, including the relative cost of rent compared to other suburbs that have already experienced price falls, and a broader issue with low wage growth in a fragile economy. There is a strong correlation between strong wage growth and rising rents, as employees receiving pay rises can generally afford higher rents.
The news isn’t all bad however, with a number of suburbs experiencing double digit growth in average rents. The standout performer was Malabar (+20%), followed by Putney (13%), Lindfield (13%) and Revesby Heights (12.6%).
If you are concerned about falling rents, it’s worth having a chat to us here at Certainty Property. In addition to paying the rent when your property is vacant or your tenant is in arrears, we also protect against falling rents by topping up the rent should it fall below the amount we’ve guaranteed. This means you have complete peace of mind should you find that rents in your suburb fall.
If you’d like to know more about how Certainty Property can maximise the cash your investment properties generate, send us a message on our online chat.