Sydney becomes “biggest tenants market in 20 years”

Speaking to Nine News, SQM Research’s managing director, Louis Christopher, describes Sydney’s rental market as “very much a tenants market right now, it’s probably the biggest tenants market I’ve seen in my last 20-years”.

This comes as Sydney’s rents are reportedly plummeting across the city.

Indeed, according to SQM, Sydney’s vacancy rate hit a record high 3.9% in April:

With the increase in vacancies concentrated in inner-Sydney, which is ground zero for both Airbnbs and international students:

Earlier this month, Louis Christopher gave the following warning:

This is one of the largest one month rises ever recorded on our vacancy rates series. The blow out in rental vacancy rates for the major CBDs suggests a mass exodus of tenants occurred over the course of March and April. This might be attributed to the significant loss in employment in our CBDs plus the drop off in international students. We are well aware of a surge in short term accommodation now being advertised for long term leasing.

The question now begs is how long will we see such high rental vacancies? If it is sustained throughout the course of the year, then we can expect far deeper falls in rents which will be good news for tenants but a disaster for landlords. There will also be economic consequences with further sharp falls in building approvals likely; thereby risking a major depression in our residential construction sector as well as the rather obvious risks for housing prices.

Sydney’s rental market was already falling pre-COVID-19, down 1.0% in the year to March, according to the ABS:

Now it is facing severe falls.

Leith van Onselen

Comments

  1. DingwallMEMBER

    The Agents will be comforting Lordy Lands saying they can jack the rents up 300% in 12 months time

  2. DominicMEMBER

    Look at Brissy go – pushing for gold.

    I’m pretty certain I heard some property ‘expert’ on 2GB say just the other day that Brisvegas is set to be the hottest market for investors, going forward …

    Oh well, good thing no one made note of his name

  3. It’s a beautiful thing – I’m currently looking for a 2 bedroom rental in Sydney’s inner-west (landlord is selling our current place) and I’m the only one at inspections even after places have dropped their asking by $100P/W.

    The only question that remains is whether to live it up for a year or bank some additional savings…

      • Nice!
        My only concern with that approach is *if* rents recover you might find yourself having to move again (moving is the worst) at the end of lease. Any thoughts on that?

        • Not really. We can afford the rent easily. The place is so good that we would pay a bit more.
          12 month lease makes the pain of moving bearable.

      • Not that I’ve been able to glean unfortunately. Supposedly they’ve been planning to sell for a while, but I’m surprised they’re still proceeding.

    • For us, renting in regional NSW is more expensive than a mortgage

      Even taking into account
      No rates
      Reduced insurance on home
      Reduced petrol from mowing (I mow about 4 acres)
      etc etc

  4. Is it a mass exodus or has supply side increased? I do wonder whether or not AirBnB rentals continue to be used or if they are beginning to flood the market.