Real estate agencies are going to extreme lengths to bait new tenants amid a surge in rental vacancies that’s switched Sydney from a landlord’s market to a tenant’s one.
Sydney’s vacancy rate, which measures the proportion of rental homes without a tenant, climbed to 3.2 per cent over the December period, well up on the 2.3 per cent it was at the start of 2018.
The surge in listings was largely driven by an increase in housing stock across Sydney’s middle ring suburbs, which include areas like Auburn, Bankstown and Parramatta.
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The vacancy rate within middle Sydney on its own was 5.1 per cent, according to data from the Real Estate Institute of INSW. In January 2018 it was 2.9 per cent.
A vacancy rate of over 3 per cent normally suggests tenants have the upper hand in the market, while a rate below 2.5 per cent tended to suggest competition for rentals was tough and landlords were in a strong position.
REINSW president Leanne Pilkington said December vacancy rates represented a steep climb from those recorded earlier in 2018.
“Our feedback from agents suggests that the market is being flooded with new units, making older units more difficult to rent,” Ms Pilkington said.
Agents have responded by incentivising tenants with attractive offers, she added.
“Agencies are using tactics such as decreasing rent prices and offering free rent periods to secure tenants,” Ms Pilkington said.
The vacancy rate across inner Sydney, incorporating suburbs such as the CBD, Mosman, Randwick and Lane Cove was 3 per cent.
In Sydney’s outer areas, including Penrith, the Sutherland Shire, Blacktown and Hornsby, the vacancy rate was 3.3 per cent.
In Wollongong the vacancy rate remained steady at 2.7 per cent. In the Hunter, vacancy rates rose to 1.9 per cent.
Data published earlier this week by SQM Research confirmed tenants have more access to rental properties than they would have a few years ago.
Nearly 3000 more rental homes became vacant over the December period, pushing the total number of listings across the city to just over 25,000 according to SQM.
This was 7800 more listings than were available at the start of 2018 and more than double the number of listings in Melbourne, where there is a similar number of tenants and properties.
SQM Research managing director Louis Christopher said some of the December spike in listings was the result of “seasonality”, with tenant demand usually down over the month.
“If current vacancy rate levels continue to rise into January and February (it) will be a tenant’s market in 2019,” Mr Christopher said.