Emerging oversupply of units in Sydney is pushing rents down in the nation’s biggest city.
According to data from CoreLogic, rental growth is slowing across the nation, led by a fall in rents in Sydney.
Sydney rents fell 3.1 per cent over the year to 30 April, while rents fell a whopping 5.6 per cent in Darwin. In Melbourne, rents rose just 1.8 per cent from a year earlier, while in Brisbane and Adelaide they rose 1.5 per cent and 1.4 per cent, respectively.
Only Hobart bucked the trend, with rental growth registered 5.7 per cent, according to CoreLogic. That comes as renters there face an ongoing shortage of rental accommodation, which has pushed up rents.
SQM Research managing director Louis Christopher said an influx of new apartment completions is likely to contribute to increased vacancies and downward pressure on rents, especially in Sydney.
“I expect to see the vacancy rate in Sydney go over 4 per cent before the year is out, which will push rents down further,” he said.
“We’ve seen slowing population growth in Sydney [which sat 1.8 per cent in 2017-18], and therefore demand for rental property is slowing and not absorbing supply. In Melbourne, however, population growth is much stronger [posting 2.5 per cent in 2017-18], so rental demand is still absorbing new stock,” he said.
SQM Research data reveals the vacancy rate in Sydney sat at 3.4 per cent in April, up from 2.3 per cent a year earlier, as an oversupply of units emerges in that city. The national residential rental vacancy rate jumped in April 2019 to 2.3 per cent, an increase from 2.1 per cent in March.
The total number of vacancies Australia-wide is now at 77,664 properties for rent, a rise of just under 10,000 dwellings over the past 12 months.
Mr Christopher said that he expects the rental vacancy rate will also rise in Melbourne over the remainder of 2019, but he doesn’t expect it to rise over 2.5 per cent.