Continued oversupply of apartments has pushed Sydney’s rental vacancy rates up for the fifth consecutive month to nearly 4 per cent.
Figures released today showed Sydney had a 3.7 per cent vacancy rate over the January period — the highest level recorded in recent years. This figure is well up from the 2.3 per cent vacancy rate a year ago.
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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Inner ring areas such as the eastern suburbs, lower north shore and inner west recorded a 3.2 per cent vacancy rate, well up from 1.8 per cent 12 months ago, according to data from the Real Estate Institute of NSW.
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 tends to suggest competition for rentals was tough and landlords were in a strong position.
REINSW president Leanne Pilkington said landlords in Sydney’s western suburbs were feeling the brunt of the increases.
“All the developments that Sydney has seen in recent years are all finishing at the same time, especially in the west and north west of Sydney, and this is leading to a lot of vacant stock,” she said.
Ms Pilkington expects vacancy rates across the city to remain high for at least another 12 to 18 months.
“It will sort itself out over time, but it is a question of how long,” she said.
The vacancy rate within middle Sydney on its own was 4.2 per cent, which is higher than the 2.5 per cent figure from a year ago.
In Sydney’s outer areas, including Penrith, the Sutherland Shire, Blacktown and Hornsby, the vacancy rate was 3.5 per cent, a 0.2 per cent increase from a month ago.
The increase in vacancy rates is leaving many landlords with no choice but to drop their asking price — including Hollywood star Rebel Wilson.
She has had to drop her asking rental price twice on her recently settled Gladesville investment apartment, and is still yet to find a tenant.
The two-bedroom Bella garden apartment, complete with private lawn courtyard, was advertised for $660 a week late last year.
But Wilson will now take $595 a week through Cobden & Hayson. She had sought $625-a-week in January but a willing tenant failed to emerge.
Ms Pilkington said landlords needed to be realistic on price as the market has come back.
“They need to understand that tenants aren’t prepared to pay any more than what they have to,” she said.
She said the current conditions have come as a shock to many landlords who are hoping to make money off their investments.
“As a landlord you expect to see rent go up, not the other way, which is a big shock for some,” she said.
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