Rents in Sydney’s suburbs have been on a rollercoaster for the past few months, with the obvious culprit being the Covid-19 pandemic and all its side-effects.
But while some areas have seen serious reductions in rents, allied to increases in availability, other rental hotspots have seen surges in demand and consequent increases in rents.
And, as Sue Williams reports in this story for Domain in the Sydney Morning Herald and Age, the extreme fluctuations have been exacerbated by another “viral” culprit … Airbnb.
Apartment rents in one of Sydney’s most sought-after inner city areas have plummeted by nearly 27 per cent over the last year in a massive windfall for tenants seeking homes that were previously beyond their budgets.
Meanwhile, some of the city’s more salubrious suburbs, especially on the beaches, are seeing residential rents soar.
That’s not the case in Millers Point where rents have dropped by 26.9 per cent to a new median of $708, the biggest fall of all the reductions mainly hitting apartments in the city and eastern suburbs, according to the Domain Group’s new rental report.
Most of the change is a result of the COVID-19 pandemic, with landlords giving discounts, properties on tourist short-term letting platforms like Airbnb reverting to the long-term residential market creating more supply, and people moving out to less densely-populated areas or beach suburbs.
“I am lucky enough to have a very, very compassionate landlord,” said award-winning wedding photographer John Laham, 67, who rents an apartment in the prestigious Highgate building on Kent Street in Millers Point in the northern CBD. “He agreed to give me a great reduction where my rent almost halved until things pick up.
“Millers Point is a perfect place to live, accessible to everything yet outside the busiest hub of the city. I take pictures every day here and have been recording everything over the last year, and I feel very grateful to my landlord for allowing me to stay.”
At the same time, many of the old terraces in the suburb that were converted into apartments for short-term lets for tourists are now back in the residential pool, says John McInerney, the past president of the Millers Point Residents Action Group.
“That’s been the biggest change, so rents have fallen with a lot more supply when before they’d priced out the long-term residents,” he said. “So that’s been great for our community while people who kept a small apartment to come in and be close to the office don’t need those any more as they’re working from home.”
Malabar, in the east, is another suburb where house rents, this time, have dropped by 20.8 per cent to $950, while Pyrmont house rents are down by 16.5 per cent to $710 and unit rents by 15.1 per cent to $620, while Haymarket units are down 15.2 per cent to $700, units in The Rocks by 15 per cent to $850, and those in the city of Sydney by 14.7 per cent to $640.
“The areas that have seen the biggest falls have tended to be units in the city,” said Domain senior research analystDr Nicola Powell. “There have been big changes in the demand and supply, with those areas more exposed to the coronavirus changes in terms of overseas migration, overseas student numbers and tourists.
“International border closures have curtailed tourism and national closures have hit interstate tourism, and those are the areas that tend to have more short-term lets. I think people are trying to move from units to bigger homes where you can get more for your money, or have more room for a study to work from home, so you don’t need to live in the CBD now to be close to work.”
Unit rents in other areas beyond the city and east have been hit too as tenants relocate to houses, taking advantage of cheaper rents, according to Dr Powell. Apartment rents have dropped by 18.2 per cent in Bass Hill for instance, 17.3 per cent in Dundas Valley on the Upper North Shore and 14.3 per cent in Tempe in the inner west.
Of Malabar, with the second biggest rent fall, agent Evgeni Tchoudnovski (correct) of YNM Real Estate said COVID-19 has had a huge impact. “We’ve had people moving out of the area to get out of Sydney to the coast which is more affordable,” he said. “Everyone is working on Zoom now, so they don’t need to be near the city.”
While the vast majority of Sydney’s 658 suburbs have had rents fall over the last year, there have still been 125 where rents have actually risen, however.
Top of that list is Dover Heights, where the median house rent has risen by a staggering 29.6 per cent to $1,750 a week. Houses on the Northern Beaches have also been faring well, with Narrabeen recording a 26.7 per cent rental rise to $950, Palm Beach 22.9 per cent to $1,475, Balgowlah Heights 17.8 per cent to $1,738 and Warriewood 16.5 per cent to $990.
“Some of that price growth has been unbelievable!” said Dr Powell. “Some of it will be the result of large, expensive, fully-furnished houses that have been on short-term leases going back into the long-term rental market and lifting the median price point.
“But people are also working from home and deciding they want to be closer to the beach or have more lifestyle properties, or leasing permanent places to holiday, which are raising rents.”
Sabina Morris of Ray White Unlimited at North Bondi who is advertising one of the two houses at Dover Heights available for rent says there’s simply so much demand for the family-friendly area with its ocean and city views, and reserves. “And there’s just so little stock available,” she said.
It’s a similar story on the northern beaches. “Now being able to work from home, everybody wants to move to the northern beaches,” said Laura Mears of Belle Property Avalon.
“People have been rethinking their lifestyle and, with owners who used to rent out their properties now not able to go overseas and choosing to use them instead, there’s even less available for rent.”