Property experts say house and unit owners are charging "catch-up" prices to make up for recent lean times when rents barely moved. People looking for rental properties are now spending, on average, six weeks hunting for homes.
Property management company RUN Property said that close to 80 per cent of Sydney properties relet between July and October last year had their rents increased by an average of $50. There is also pressure on the rental market from the shrinking supply of new houses, a lower number of affordable first homes and concerns about rising mortgage interest rates. The vacancy rate in Sydney now stands at 1.5 per cent.
RUN chief executive Nathan Cher said increases in rent were caused by a drying up of stock in popular residential areas. "This represents a coming into line of the [rental] yields in residential areas so it's probably welcomed by the landlords." He said.
"I don't think there's anything unfair about the fact that rents have come up to this level. To some degree there's some catch-up going on especially where landlords haven't reviewed rents for many years." Suburbs with the highest percentage rent increases when properties were re-let - between July and October last year - were Wollstonecraft with a 16.7 per cent rise and Potts Point at 9.9 per cent. A two-bedroom apartment in Goulburn Street, Surry Hills, was leased for $580 a week after being advertised for $550.
A three bedroom house on Glenmore Road, Paddington, was advertised at $560, but the new tenants signed a lease for $580. Inner-city real estate agency Bresic Whiteney found rental properties were advertised for an average of five days before being leased.
Director Shannan Whitney said it was the strongest rental market in Sydney for eight years. "When things become available we are putting a little bit more on all our properties and they are going very quickly," Mr Whitney said.
"The main problem is there's no stock, mainly because few investors have bought in the past few years." "We've found cheaper stock is renting for up to 15 per cent more while larger properties are renting for 5 to 10 per cent more." Australian Property Monitors, which tracks rental movements, found average rental prices in popular suburbs- such as Surry Hills, Newtown, Kirribilli and Wollstonecraft - increased between $10 and $40 a week during the 12 months to December 2006.
APM housing expert Michael McNamara said the rental trend was a follow on from the "east versus west" housing divide, already apparent among buyers. "Rental properties in Sydney's most sought-after locations, the places where young people want to live, are continuing to grow very strongly. "We see this situation only getting worse as rents become more unaffordable in Sydney's best locations."
