The Rental Market

Figures published by Domain this week show Sydney house rents have increased by 5.7% in the year to September, reaching $860 per week, while unit rents have risen by 4.0% over the past 12 months to $780 per week.

Rental vacancy rates on the Northern Beaches remain around 1.5%, well below the 3% level generally considered to represent a balanced leasing market. Rental prices have risen sharply over the last three years, with local rents increasing by a further 5% for units and up to 10% for houses this year.

Demand from prospective tenants remains strong, with a significant shortage of properties available to lease. I feel that uncertainty surrounding proposed changes to negative gearing has contributed to some investors holding back from the market, further tightening the supply of rental properties. We are now regularly leasing one-bedroom apartments in Manly for $900 to $1,000 per week, while houses in Balgowlah Heights are achieving between $2,700 and $3,200 per week. Newer properties in Manly, particularly those with beachfront positions or spectacular views, can achieve up to $4,000 per week.  However, Domain's latest data suggests we may be approaching peak rental prices under the current economic conditions. With the cost of living continuing to rise, many prospective tenants appear to be reaching their affordability limits, and we have seen rental prices begin to ease slightly over the past month.

This recent ABC News article provides further insight into what is happening across Australia's rental market.

We have recently leased properties for owners who were considering selling but, given current market conditions, have instead decided to lease their properties and move forward with their plans. A few other owners have been surprised by the rental returns their properties can achieve. We recently took on the management of a three-bedroom property in Manly and discovered that the existing rent was approximately $600 per week below its current market value. That equates to more than $30,000 per year in potential rental income that the owner was missing out on.

If you are considering leasing your property or simply want to know whether your current rent reflects today's market, please get in touch. We would be happy to provide an updated rental appraisal and discuss how we can help maximise your investment returns.