Sydney rental vacancy highest since 2005

In terms of Sydney CBD rental, it is, definitely been impacted by the recent completion of Darling Square apartments where there are tons available for rent:

Real Estate & Property For Rent in Haymarket, Nsw 2000 (Page 1)

As a result all the tenants just move to Darling Square and then everyone else needs to discount their rent.

 

Didn't I hear some investor saying that people in Sydney will do or pay anything to avoid long commutes? Stock in very central places is now accessible at affordable prices. This will be the case until the supply is soaked up.

Rising rental vacancies and associated short term pain is not surprising at all. Just have to give it time before jumping in again. Corrections are healthy and way better than recessions.

 

That’s about standard for inner city suburbs really... 2-3% gross yields...

People hanging on for capital gains that have disappeared recently hence the low sales volumes....
Hope and hold for CG is the current strategy for many boomers while paying 10-20K for the privilege

 

"An investor-led building boom has almost doubled the size of the Sydney apartment rental market in two years, forcing landlords to drop rents more than $100 a week in some areas to secure tenants, and casting a shadow over the thousands of units still under construction."

"Sydney is in the grip of an apartment building boom, with 30,880 multi-unit dwellings built last year, a record for any Australian city. There were 16 multi-unit projects finished in the first three months of 2019, adding another 1948 units.

Sydney has a pipeline of 194,000 multi-unit dwellings at various stages of development, a report by the Urban Development Institute of Australia (UDIA) shows. Multi-units include terraces and townhouses as well as apartments.

These numbers are flowing through Domain.com.au, where 17,500 units were listed for rent in June 2017, and ballooned to 32,680 listings in June 2019. The result has been landlords asking for $25 a week less median rent than last year."


https://www.smh.com.au/national/nsw/apartment-oversupply-puts-squeeze-on-rents-20190705-p524cp.html

 

Thanks for this post. The numbers are staggering aren't they. Certainly these numbers will suppress unit price and rental increases in the next year.

Just two quick qualifiers though:

Firstly, developers are very conscious of this, and they are staggering the release of apartment dwellings to precisely avoid the dumping of supply on to the market.

Secondly, I would just comment, that a lot of the new supply doesn't actually appeal to Australian tastes, nor does it align to Australian family formation. Too many 1 and also 2 bedroom units, so I would expect shorter tenancies and more rental churn.

Cheers,
John

 

How much do you think they can actually control this and how much does this hurt the bottom line? If they're building at a particular time it's hard to see how they can spread that demand out without leaving empty apartments for significant periods. Or do you mean the actual construction time-frames are being pushed back to slow the supply increase?

 

How long can they hold?
what will it do jobs?
Sydney is all about financial and construction jobs (and its peripheries)
and finance sector globally is already under pressure with many recent job cuts announced in some of the big firms, it will impact our shores as well.

 

Source: Propertyology

Sydney currently has its highest vacancy rate in the 14-year history of official records. It’s a biproduct of an era that consisted of a construction boom and 60% of properties purchased by investors. Sydney’s rental stock has been flooded. With the pipeline of new supply in the system still high, Sydney rents will continue to soften over the coming year.

 

And if the trend contiues with job losses , esp in construction, you might see more move away from Sydney in search of work but pushing the vacancy rate even higher..

 

Be careful posting this stat could get you kneecapped in certain circles

 

There is actually very limited scope for developers to stagger / delay project releases. Once they commence building, they need to completed the building process ASAP as there's ongoing cost (like the interest on loans) and their profit margins shrink every day that the project is not completed on time. So yes they can delay the start of building, but in an oversupply situation its every developer for themselves as the sooner they start and complete the project, the sooner they see the money. why would you slow down your releases when your competitor is pumping out units?

 

Alot of sites I see in the area of my work,
Where developers have holted the start.

We’re for Sydney | Daily Telegraph

This one has sat out for 1.5 years.

Their is 2/3 sites in Liverpool that have halted.

In the shire their is a few sites that have chosen to else now and wait until pick up.


This is not a case for everyone.


I ahve noticed the developers are now very quick out of the ground and on typical they re done in around 12 months. So they are more efficient.



In so once started yes its hard to stop but many are choosing to delay the start times.

 

What is that going to do to jobs in constructions and its periphery?

Eod,
Over-supply translates to falling rents
Under-supply translates to rising rents.

 

I follow house rents quite closely around Concord, Fivedock area. Particularly in the 600 to 900 range. I mark the asking price in the notes and update (append) it as they change.

I would say 80% of listings drop from 50 - 100 dollars before taking a deposit.

 

Its alot .

 

Yes. Also, true rents are hard to track. There is no equivalent to "sold" price.

 

I track Five Dock closely as well as some other suburbs in terms of rental. And one thing I would say that I have observed, is that suburbs without train stations (like Five Dock, Lane Cove etc) have been hit hardest in terms of rental reductions. Rents in suburbs with train stations seem to have held up better.

I know that there will be some exceptions, and I know that supply and demand drives rental prices. But has anyone observed a correlation similar to the above?

 

Spoke to an RE Agent from Balmain tonight who said he has never the market this slow...

They are starting to telll vendors it’s really worth spending the 5-10K to spruce up a place before starting the marketing campaign rather than have it vacant for a few months.

 

What is even more interesting...is there are people on this forum who want to build Granny Flats in the current market...wow...that is 150k out the window.

Rents for 2 brm units are now under $400pw.....ask for a $20-30 reduction and you will get it. Renting a unit for $370pw makes a lot more sense than paying 500k for a unit and then paying about 400pw another 6k (120pw) for water,strata, and rates. Much cheaper to rent than buy for the next 2 years at least....

 

I wonder who these ppl are