2019 is shaping up to be a good year for tenants as increasing housing supply and falling demand force landlords to slash rents.
Figures published this week showed rents for all types of homes, including units and houses, dropped 3 per cent over 2018 — but the falls were substantially higher in areas with a long pipeline of housing developments.
Rents in Penrith enclave Llandilo, where developers have released a slew of new houses, dropped 15.4 per cent over the year to September, while in nearby Luddenham they dropped 13.3 per cent.
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Advertised rents in southwestern construction hot spots Airds and Catherine Field dropped by about 11 per cent, according to the CoreLogic data.
Additional figures from SQM Research showed landlords are facing longer vacancy periods in the search to find tenants.
Just over 3 per cent of the city’s rental properties remain vacant — the highest proportion in more than four years.
Tenanting properties has become especially difficult in the Hills District, where nearly 7 per cent of the rental homes are empty.
Vacancy rates in the upper north shore and lower north shore were also unusually high at 4.7 per cent and 4.2 per cent respectively. The rate of vacancy in Parramatta and Sydney’s far west was 3.5 per cent.
Vacancy rates in these areas had been about 2 per cent for much of 2016.
CoreLogic analyst Cameron Kusher said Sydneysiders could expect rents to continue going down over the year.
“There was so much investor purchasing over the (preceding) years and that’s given tenants a huge amount of choice,” Mr Kusher said.
“Landlords will have to be competitive with their rents if they want to find a tenant.”
High rates of interstate migration out of NSW and into Queensland also suggested tenant demand was diminishing, he added.
“Demand for housing is still fairly strong but it is not what it once was … current conditions in the rental market will last a while. There is so much stock on the market.”