Sydney house rents have climbed by an average of $50 per week in the past three months as recent government tax reforms spark an exodus of new landlords from the market.
Newly released figures from research group PropTrack showed Sydney house rents climbed by 6.3 per cent over the period and now average a record $850 per week – the highest in the country. The rise will add $2,600 to the annual rent bill of the average house tenant.
Unit rents increased an average of 4 per cent, or $30 per week, over the same period, with Sydney tenants paying more per week for apartments than every other capital’s residents paid to rent houses.
The figures represent the first major reading of rents since it first became apparent that negative gearing and capital gains tax reforms would be announced in the federal budget.
MORE: ‘Stealth’ way NSW is charging 13 times more tax
Competition for rentals remains high.
The changes were announced in May, but government leaks to media had meant the reforms had been widely reported to be in the pipeline back in April.
The reforms included the replacement of previous discounts on capital gains tax with an indexation system tied to inflation and negative gearing concessions being limited to new builds only.
REA Group economist Luc Redman said the impact of the budget changes was still filtering through to rents.
“The May federal budget, which announced sweeping changes to investor tax settings, occurred in the middle of the quarter, so the full impact on the rental market is yet to be seen,” he said.
“The expected decrease in investor demand due to the budget’s tax changes could slow the pace of new supply, putting further pressure on rents.”
MORE: Albo policy to drain $800m from NSW coffers
REA Group analyst Luc Redman said the impact of the tax reforms was still filtering into rents.
A report by property analytics group FoundIt released in June showed the number of new landlords purchasing rental properties dropped in the first month since the tax reforms were announced. Meanwhile, sales of rentals climbed.
There were close to 2,159 rental bedrooms added to the Sydney market over May, which was well below the 3,744 rental bedrooms that were lost through sales.
FoundIt head of research Kent Lardner said the trend could accelerate in the coming months, noting negative gearing being retained for new builds would fail to entice investors.
“In established areas, if a rental is sold, it’s not being replaced,” he said. “This has meant a loss of rental stock. Vacancies are already tight in most areas and the result is that rents will continue to rise.”
MORE: Fury as Aussies pay $61k govt fee ‘for nothing’
Fewer investors are buying rentals.
Cotalty head of research Gerard Burg said rent increases were outpacing household incomes, driving severe rental affordability issues.
“(An) underlying supply deficit means conditions remain incredibly challenging for tenants,” Mr Burg said.
SQM Research director Louis Christopher said there were not enough rental homes to house all the people who needed them.
“Without a substantial increase in housing construction and rental stock, and a meaningful decrease in population growth … affordability pressures are likely to persist through the remainder of 2026 and into 2027.”
English (US) · 