Landlords have been offering properties rent free for up to a month in a bid to lure increasingly picky tenants into leases.
It comes as new figures revealed a surprising turn in the real estate market, with many parts of Sydney recording a large increase in rental vacancies.
The largest supply of available rentals tended to be areas dominated with high-rise units, along with popular beach locations.
Many of these areas had recently become “tenant’s markets” – with tenants able to dictate terms because the supply of available rentals outweighed demand.
Eight units in this building at on Peters St in Zetland have been offered for lease with the first four weeks occupancy rent free.
This was a sharp contrast to the rest of Sydney, which continued to have a severe shortage of available rental housing, with long lines of prospective tenants frequently observed at open for inspections.
It’s also a marked change from the past two years when a rental supply crisis and record migration strapped a rocket to city rental prices, sending them soaring an average of 30 per cent.
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SQM Research Louis Christopher said the federal government’s recent attempts to curb migration, particularly international student arrivals, had helped thin the rental pool and increase vacancies.
More tenants were also grouping together in share houses, Mr Christopher said.
“People are sharing the rental burden and that has freed up stock,” he said, adding that there was a small degree of seasonality to the weaker market: winter normally sees some lull in tenant demand.
“Overall, the supply of rentals across Sydney is still tight but a lot of the bad news for tenants is already priced in. Landlords have already increased their rents by large margins and it’s reached a point where they cannot increase them further and expect to attract tenants.
“Some landlords have even gone above the market and they will be the ones who will have to adjust their rents down.”
A unit in this building on Gardeners Rd, Mascot is being offered with the first two weeks rent free. .
Among the properties currently offered up for rent with generous terms are eight units in a Zetland building on St Peters St. Each is being offered with the first four weeks of the lease “rent free”.
Similar deals were offered in Mascot, Chatswood, Lidcombe, Wolli Creek and Lane Cove.
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Analysis of rental home data showed Sydney’s CBD and Haymarket had the highest supply of vacancies across major rental markets.
About 5.5 per cent of total rental homes in the region were currently advertised for rent – considered the mark of an area where tenants hold all the power, according to SQM Research.
A unit in this building on Flock St., Lidcombe, is being offered with the first two weeks of tenancy free.
Vacancies were also frequent – with rates near the 4 per cent mark in Bondi Junction, Pyrmont, Mascot, Ultimo, Box Hill and Chippendale.
For some context, a vacancy rate of about 2.5-3 per cent normally means tenant demand and rental supply are balanced.
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Northern beaches suburbs Palm Beach and Church Point had the highest vacancy rates across Sydney at 27.8 per cent and 24.6 per cent, but many were holiday rentals.
Long lines of tenants were the norm at inspections most of the year. Picture: Liam Kidston
Eastern suburb Woollahra had the highest vacancy rate for an area within a 10km radius of the CBD. Many similar affluent suburbs like Vaucluse and Bondi Beach also had high vacancy rates.
“This tends to happen when the economy slows,” Mr Christopher said. “Pricey rentals are discretionary spending. No one needs a $2000 a week rental. It’s a choice.
“Owners of medium-sized enterprises who’ve see a drop in earnings, or senior managers who’ve been laid off, will look to save money and moving out of an expensive home is often the first step.”
Tenants faced radically different conditions in Sydney’s middle and outer suburbs where demand for cheaper rentals has skyrocketed. Some of the suburbs in these regions currently had no vacancies.
This Lane Cove unit is being offered with the first two weeks of the lease “rent free”.
This $850 a week Carlingford rental house is being offered with the first two weeks free.
PropTrack economic analyst Megan Lieu said rents may continue to rise in some areas over coming months but tenants were probably through the worst of the rental crisis.
“While it continues to be difficult for renters to find available properties in Sydney, there has been some improvement in the past few months,” she said.
Part of improvement in vacancies could be attributed to a recent increase in investor activity, Ms Lieu said.
“The return of investors to the market, following their mass exodus during the pandemic period, has led to a much needed uplift in properties hitting the market.
“This has slightly offset the demand from renters brought about by strong population growth and has contributed to a moderation in the growth of weekly rents.”
MOST VACANCIES
(no. current vacancies as % of all rental homes in 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%
Ultimo 3.7%
Chippendale 3.7%
Source: SQM Research
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