Sydney rent forecast: $2k a week to become new norm in some areas

2 days ago 7

Paying rent above $2,000 a week is set to become the norm for tenants in many parts of Sydney by the middle of the next decade, new forecasts have revealed.

These gargantuan rents will chew up more than $104,000 a year in household incomes – which are not projected to rise sharply.

It has experts warning tenants with means to consider becoming first-home buyers to escape the rental increases.

Modelling of price data using SQM Research forecasts revealed the citywide average rent of houses would be $1,048 per week by 2035, up from $800 today. This would add an average of close to $13,000 to annual rents.

Unit rents were forecast to average $983 in 10 years, up from $750 currently – or about $12,000 higher per year.

Dozens of Sydneysiders pictured lined up outside an open-for-inspection rental apartment in Surry Hills. Picture: NCA NewsWire / Nicholas Eagar

Rent rises would be substantially higher in Sydney’s eastern suburbs. House rents in Bellevue Hill were expected to average nearly $5,000 by 2035, up from $3,500 currently.

North shore suburb Longueville’s current rental house median of $2,925 is predicted to rise to $4,166.

The modelling was based on forecasts of two to four per cent annual increases in rents across Australia’s capitals in the next year, which would be roughly in line with inflation.

SQM Research founder Louis Christopher said tenants may get some respite if building activity picked up.

Those who exited the rental market would be better off, he added.

MORE: New scheme burying Aussies in debt

Enaya Anani at her rental house, in Peakhurst, Sydney. Picture: Justin Lloyd

“If you have the opportunity to get in as a first-home buyer you should seriously look at it,” he said. “Yes the market is going to pick up in the next year, but I think the way it’s gone for tenant’s who have turned into first-home buyers than has been better over those who remained as tenants, and I don’t see that changing any time soon.”

Tenants say they’re already struggling. Peakhurst mum-of-two Enaya Anani said affordability pressures have become a growing source of anxiety for her.

She was forced to move on short notice for the second time in two years, despite seeking a long-term lease, because the landlords or their family members moved in.

Ms Anani said simply securing a family home that wasn’t “rundown” was a challenge.

“The prices out there are just ridiculous for houses that just aren’t liveable,” she said. “You can’t find anything that’s under $1,000 that’s decent.

“Going to inspections, the amount of people that are there applying, your chances are so slim.”

MORE: Your answer to this shows if you’re happier

Enaya Anani said simply securing a family home that wasn’t “rundown” was a challenge. Picture: Justin Lloyd

Ms Anani has now approached tenants advocacy group The Rent Fairy to assist her in locating a property and said she felt discouraged by what she might have to pay in rent in the coming years.

She asked how are parents “going to afford to pay the rent, to live, to put food on the table, pay the bills and try to set your kids up?”

Rent Fairy founder and direct Sarah Elkordi said renters were being pushed from inner suburbs to more affordable outer areas because their incomes couldn’t keep up with rent rises.

“I think the biggest impact will be on the vulnerable groups, people 18 to 25 entering the rental market, students, single parents like myself – and people who are relocating into Australia,” she said.

MORE: ‘Ridiculous’ way 32yo bought home for $25k

According The Rent Fairy’s Sarah Elkordi renters are already and will continue to move to outer more affordable areas

Ms Elkordi said clients are leaving suburbs like Darlinghurst, Erskineville and Double Bay after rent hikes, with western Sydney hubs such as Parramatta and Kellyville drawing demand – often for houses with rents similar to some inner-city one-bedders.

Ms Elkordi said more faster housing approvals will would help ease rents. “It’s everyday people who just need somewhere to live and the rents they just can’t meet them anymore.”

Property Investors Council of Australia (PIPA) chair Ben Kingsley said rents may not rise as much as predicted if governments helped expand housing availability.

MORE: Inside Sydney home with $210k a week rent

A crowd queuing up for an open inspection of a rental property located in Bondi. Picture: NCA NewsWire / Flavio Brancaleone

He said supply would ultimately cap rent growth if a situation arised where landlords had to compete with each other.

“At the end of the day, prices will still be set by demand and supply – so if there’s a strong availability of rental accommodation, you will be hard pressed to put rents up, because the tenants will move on to cheaper rental properties,” Mr Kingsley said.

PIPA is advising members and landlords to pursue rent rises well above CPI, recommending four to five per cent increases in low‑vacancy markets, rising to five to six per cent rent hikes if taxes and costs rise.