Rents in Sydney stayed flat in the three months to June, giving tenants the upper hand in negotiations with landlords, a report says. The typical rent proposed by owners in Sydney stayed at $450 a week in the June quarter as rents stalled in all capital cities, but analysts said the good times for tenants could be shortlived. It is the second quarter in a row during which asking rents have been flat, as property investors adjust to economic conditions where tenants have more housing options. This limits the scope for rent rises. Asking rents have still risen 7.1 per cent over the year to June, but this compared with a 15 per cent rise recorded last year, according to the figures from Australian Property Monitors.
The news comes amid a fall in interest rates to 40-year lows, which has made buying a house or unit much more affordable. An economist at APM, Matthew Bell, described it as the biggest shift in favour of renters since figures were first collected in 2003. “It’s a lot easier for tenants to move into ownership than it has been for a long time. Renters have that alternative open, and landlords know it.” Mr Bell said the dwindling labour market – which shed 21,000 jobs last month, according to figures published yesterday – also limited tenants’ ability to pay rent increases.
However, other indicators point to a looming housing shortage. Approvals for new apartments and townhouses in NSW fell to a 26-year low in May, and vacancy rates hit a 12-month low of 1 per cent. At $450 a week, Sydney rents are second only to those in Darwin, where a typical house can be let for $500 a week. One reason for the mixed messages on Sydney’s rental market is that the situation varies geographically.
Figures from SQM Research show Sydney had the highest vacancy rate of all capital cities in May, at nearly 8 per cent, but it varied wildly between suburbs. More than one in 10 rental properties were unoccupied in the city and Vaucluse, while in Liverpool and Bankstown the vacancy rate was below 3 per cent.
The firm’s managing director, Louis Christopher, said the economic crisis had taken a particularly hefty toll on luxury rental properties. “This city has been particularly impacted by the global financial crisis, and that has meant that a lot of upper-end homes and apartments have been running vacant for quite a while.
Written By : Clancy Yeats Source : Sydney Morning Herald (10 July 2009)