In order to attract increasingly demanding tenants, landlords are offering their properties rent-free for up to one month.
This comes after new figures revealed a surprising turn in the property market, with many parts of Sydney seeing a sharp rise in rental vacancy rates.
The largest supply of available rental apartments tended to be in areas with predominantly high-rise apartments and in popular beach locations.
Many of these areas had recently become “renter markets” in which tenants could dictate terms because the supply of available rental properties exceeded demand.
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Eight units have been offered for rent in this building on Peters Street in Zetland, with the first four weeks rent free.
This was in stark contrast to the rest of Sydney, where there continued to be a severe shortage of available rental properties and viewings often resulted in long queues of potential tenants.
It is also a significant change from the past two years, when a rental crisis and record levels of immigration drove up rental prices in the city, causing them to rise by an average of 30 percent.
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Louis Christopher of SQM Research said recent attempts by the federal government to curb immigration, particularly international student immigration, had contributed to a reduction in rental supply and an increase in vacancy rates.
In addition, more and more tenants are joining together in shared apartments, said Christopher.
“People are sharing the rent burden, and that has freed up inventory,” he said, adding that the weaker market has a certain seasonality: In winter, tenant demand is usually a little weaker.
“Overall, rental supply in Sydney is still tight, but much of the bad news for renters has already been priced in. Landlords have already increased their rents significantly and it has reached a point where they can no longer increase them further and still attract tenants.
“Some landlords have even charged higher rents than the market price, and they will be the ones who will have to adjust their rents downwards.”
A unit is being offered in this building in Gardeners Road, Mascot, with the first two weeks rent free. .
Properties currently available to rent on generous terms include eight units in a Zetland building on St Peters Street. Each unit comes with the first four weeks of the lease “rent free”.
Similar offers were made in Mascot, Chatswood, Lidcombe, Wolli Creek and Lane Cove.
An analysis of rental housing data found that Sydney’s CBD and Haymarket have the highest vacancy rates of all major rental markets.
About 5.5 percent of all rental apartments in the region are currently offered for rent – according to SQM Research, this is seen as a sign of an area where renters have all the power.
Vacancy rates were also common, with rates around 4 percent in Bondi Junction, Pyrmont, Mascot, Ultimo, Box Hill and Chippendale.
For comparison: A vacancy rate of around 2.5 to 3 percent usually means that tenant demand and rental supply are balanced.
An apartment in this building on Flock St., Lidcombe is offered with the first two weeks rent free. Rent is $900 per week.
The northern beach suburbs of Palm Beach and Church Point had the highest vacancy rates in Sydney at 27.8 percent and 24.6 percent respectively, but many of these were holiday rentals.
The eastern suburb of Woollahra had the highest vacancy rate for an area within 10km of the CBD. Many similarly affluent suburbs such as Vaucluse and Bondi Beach also had high vacancy rates.
“This usually happens when the economy slows down,” said Christopher. “Expensive rents are voluntary expenses. No one Needs a rent of $2,000 per week. The choice is yours.
“Owners of medium-sized companies whose profits are declining or senior executives who have been laid off want to save money. Moving out of an expensive home is often the first step.”
Long queues for inspections were the norm almost all year round. Image: Liam Kidston
In Sydney’s middle and outer suburbs, the situation for renters is very different as demand for cheaper rental accommodation has skyrocketed. Some suburbs in these regions currently have no vacancies.
Megan Lieu, economic analyst at PropTrack, said rents in some areas may continue to rise in the coming months, but renters are likely already past the worst of the rental crisis.
“Although it remains difficult for tenants to find vacant properties in Sydney, there have been some improvements in recent months,” she said.
The improvement in vacancy rates is partly due to the recent increase in investor activity, Ms Lieu said.
This unit in Lane Cove is offered rent free with the first two weeks of the lease.
“The return of investors to the market after their mass exodus during the pandemic has led to a much-needed surge in properties coming onto the market.
“This has somewhat offset the demand from tenants driven by strong population growth and helped to moderate the increase in weekly rents.”
MOST OPEN POSITIONS
(Number of current vacancies as a percentage of all rental apartments in the suburb)
Palm Beach 27.8%
Church Point 24.6%
Woollahra 6.2%
CBD/Haymarket 5.5%
Vaucluse 5%
Edgecliff 4.9%
Avalon Beach 4.7%
Box Hill 4.2%
Bondi Beach 3.9%
Pyrmont 3.8%
Mascot 3.8%
End of month 3.7%
Chippendale-3.7%
Source: SQM Research
