Surging rental demand in Sydney

Jun 30, 2017

When it comes to Sydney’s skyrocketing house prices, much of the focus is on owner-occupiers. However, they’re not the only ones impacted by the booming market.

Oven overlooked, rising house prices are also affecting the rental market with new data showing a dramatic lift in demand from renters as they jostle to secure affordable living space across the city.

Rental demand strong in Sydney

A recent Property Demand Index from REA Group1 bears this out. It shows a 17 per cent lift in demand among people in NSW looking to rent in the last 12 months, compared to a nationwide average of 15.7 per cent over the same period.

Somewhat unsurprisingly, given the lifting demand, REA Group also confirmed that Sydney is the most expensive capital city for renters, labeling it “the least affordable city for renters in Australia”.

REA Chief Economist Nerida Conisbee says demand for rental properties on hit a record high in March 2017 as “rental properties available for lease failed to keep track with the growth in people looking to rent”.

“Despite high costs, demand from renters remains high and continues to accelerate (in Sydney). This may be partly to do with buyer unaffordability, but it’s also likely that jobs growth is a factor,” Conisbee adds.

Positive signs for renters on the horizon

Some relief could be in sight for renters, with signs rental demand may have eased slightly nationwide in recent weeks.

REA’s Conisbee says more investors in the market is likely to have boosted rental supply during April, creating more opportunities for renters and taking some heat out of the market.

Another factor that could dent rental demand, she says, are the escalating prices, with unaffordability likely to cause more people to abandon Sydney as a place to rent.

“It’s likely that rental rates will also continue to moderate as a result,” Conisbee concludes.

Renters in need are doing it tough

Sydney’s tight rental market is making it especially difficult for those renters in particular need of inexpensive housing, as evidenced by Anglicare’s 2017 Rental Affordability Snapshot.

The snapshot, which surveyed more than 67,000 properties on the first weekend in April, found a dire shortage of affordable rental houses for people on low incomes.

At a national level, it found only six per cent of the dwellings surveyed were suitable for households in receipt of government benefits, down from seven per cent in 2016.

In Sydney, the situation was even worse, with just 26 out of 13,447 private rentals surveyed found to be affordable for people living on income support payments, without causing them housing stress.



  1. REA Group Property Demand Index, April 2017