Sydney rental market remains tight, yields increase and vacancy decrease in 2011
Sydney rental market continues to show strength, with rental increases across the board. Rents rose across the majority of Sydney especially the unit market. Further rental growth is expected this year.
There are several factors that have changed in the market, contributing towards the return to growth. Demand for the Sydney real estate market remains strong, with a lack of accommodation across Sydney due to few new developments, and rental yields are still relatively high. Five interest rate rises over the past year have forced many would be buyers to stay on as renters.
Property investors are beginning to return to the Sydney housing market, lured by high rents, a return of positive sentiment, a strong economic recovery, improved job security and historically low interest rates. Investors are seeing opportunities in the Sydney property market after years of avoiding it. Low interest rates, a recovering economy and house prices starting to increase, suggesting that the property market may have bottomed out last year. International investors are also very active in the Sydney real estate market.
There are still opportunities for positively geared properties in the Sydney real estate market. The drop in the first home owners grant has reduced the demand for property in this segment of the market; however investors are more than making up for this, returning to the property market on mass.
Median Weekly Rents Sydney *
| |
Units |
Houses |
Unit Yields |
House Yields |
| January 10 |
$420 |
$460 |
5.01% |
4.38% |
| January 11 |
$450 |
$485 |
5.02% |
4.48% |
The current average weekly rent for Sydney houses stands at $485 per week (up slightly on a year ago). The average weekly rent for units is currently $450 per week (also up from January last year). This gives an average gross yield for houses and units of 4.48% and 5.02% respectively.
The reduction of the first home owners grant at the end of December is a significant factor in the rental market. This reduction of the grant in turn reduces the attractiveness of buying over renting. Many potential buyers have been forced to continue renting. The increase in interest rates also dampens the first home owners segment of the market, forcing many to remains as tenants till they can more comfortably afford to purchase their first property.
* Data courtesy of APM
JRS - Investment property management experts.