Sydney Rental Prices Skyrocket

Sydney tenants are facing record high house and unit rents as low rental vacancies drive up competition and prices for homes.

However, rents fell or held steady in some areas, as the rising cost of living weighs on household budgets, and lifestyle changes seen earlier in the pandemic start to reverse.

House and unit rents each climbed 4.8 per cent over the quarter, the data shows, and were up 14 per cent and 14.6 per cent, respectively, over the year. It is the largest annual increase in unit rents on Domain records which go back to 2004, and the largest jump in house rents since 2009. 

The return of skilled migrants and international students had added to already strong rental demand, which increased as more tenants sought to live on their own during the pandemic and soaring property prices left hopeful home buyers renting longer, Powell said.

Affordability constraints were pushing more tenants to apartment living, and more affordable areas, Powell said, while demand had eased in lifestyle locations that had seen extreme growth.

Units in the Parramatta region and the city and inner south, harder hit by border closures, recorded the largest increases, up more than 8 per cent each over the quarter.

Meanwhile, house rents fell on the northern beaches (-3.8 per cent), and north shore (-1.4 per cent). Rents in all regions were up year-on-year.

AMP Capital chief economist Dr Shane Oliver said the collapse in rental vacancies was pushing up rents.

“It’s probably going to take some time before it gets better because the supply of property will take time to catch up,” he said.

Rental demand could ease as more tenants look to shared accommodation or stay with family as economic conditions deteriorate, Oliver said, but this could be offset by rebounding immigration levels. Ultimately, rents would hit an affordability ceiling.