Rents are dropping as more tenants become first home buyers
Sydney rents have been getting cheaper as more tenants become first home buyers and a wave of new rental homes become available.
Median Sydney rent dropped 1 per cent over the past quarter and 2.2 per cent over the past year, with rents in some regions recording even larger falls, CoreLogic data showed.
Rents on Lane Cove houses dropped nearly 10 per cent over the year, while rents on Mosman houses fell an average 7.4 per cent.
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The drops gave tenants average savings of about $100 per week in Lane Cove and $150 per week in Mosman.
House rents in the Cumberland council area – which includes suburbs Granville, Holroyd and Lidcombe, among others – dropped 3.8 per cent, or by about $20 per week.
Falls in rent came as Sydney home prices bounced up 3.5 per cent over the past quarter.
The price increases were partly driven by increased first home buyer activity, with ABS stats showing first-time purchases reached a seven-year high over August.
CoreLogic of head of research Tim Lawless said the first-homebuyer surge had also coincided with an increase in rental properties — meaning more options for fewer tenants.
SQM Research director Louis Christopher said the market could get even better for tenants because there was a still a long pipeline of new housing getting released.
“The market is favouring tenants because there is a lot of supply being released and population growth is not as strong as it once was,” Mr Christopher said.
He added that the bulk of the new housing was in areas such as Parramatta, the northwest and the Olympic Park region, but the increased supply was having a “spillover effect” on other regions.
“Ultimately, landlords are competing for less and less tenants so Sydney rents are going down,” he said.
Realestate.com.au chief economist Nerida Conisbee said landlords in the Parramatta region were facing particularly stiff pressure to cut their rents.
“There’s less people viewing rentals in Parramatta than there are in Darwin, which is the worst capital city market for landlords at the moment,” she said.
“It’s all because there is so much new rental stock becoming available.”
Tenants Rudolf Kruger and Shenna Costa said they decided to shop for a new rental in Marrickville when they noticed neighbouring properties were being advertised at reduced rent.
“We were in a one-bedroom unit and realised we could move to two bedrooms for less rent,” Mr Kruger said.
“We’re in the same area but we’re now better located, closer to the train station. It’s a better place and we got the feeling it was empty for a while and the landlord really needed someone to move in.”