Why most inner Sydney and Melbourne rentals are still cheap
Analysis of 600,000 rentals by the ABS found that renters in inner Sydney and Melbourne have not experienced the same dramatic increase in costs as elsewhere, but that could be coming to an end. The ABS has found that almost every renter in Sydney and Melbourne is paying more now than they were before the pandemic, with almost 95 per cent of new tenants signing leases charging more rent than the previous tenant at the same property paid. The reason for the discrepancy is that rents have fallen further in the two cities, and they are slower to recover. The ABS found that renters in the 10% most expensive properties had experienced larger rent increases than people living in the cheapest 10 per cent homes, but lower income households would still be feeling the pinch more than rich ones.
Pubblicato : 2 anni fa di Michael Read in Finance
Outside of Sydney and Melbourne, almost every renter is paying more now than they were before the pandemic, regardless of their distance from their local CBD, with Australia grappling with what experts have labelled a rental crisis.
The ABS said the reason for the discrepancy was that rents fell further in Sydney and Melbourne during the pandemic, and they were also slower to recover.
“This was driven by factors including a higher prevalence of rent reductions, higher vacancy rates and larger declines in net internal and overseas migration.
“Nonetheless, the rental market has tightened significantly in inner-city areas over the past year, particularly for new tenancies that have experienced large rent increases.”
In Sydney and Melbourne, rental markets are extremely tight, with the number of available properties falling rapidly over the past year, driving advertised rents increasing sharply.
Almost 95 per cent of new tenants in February 2023 signed leases charging more rent than what the previous tenant at the same property paid, with close to 70 per cent of new tenants copping a more than 10 per cent increase in rent.
About 70 per cent of existing tenants whose lease came up for renewal in February were hit with a rent rise, up from just 14 per cent in February 2021.
About one in four lease renewals were accompanied by a rent rise of more than 10 per cent. Increases of this magnitude seldom occurred between 2020 and mid-2021.
Only 2 per cent of lease renewals were accompanied by a rent reduction, while one in four renewals received no change in rent.
The ABS found that renters in the 10 per cent most expensive properties had experienced larger rent increases than people living in the cheapest 10 per cent of homes.
But the ABS said that lower income households would still be feeling the pinch more than rich ones.
“For example, all else equal, a 7 per cent increase in rent for renters in the 10th percentile of the income distribution would reduce the amount of income available for other uses more than a 10 per cent increase in rent would for renters in the 90th percentile of the income distribution.”
Temi: Economy, Australia