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Tenants warned of steep rent increases
JOSEPHINE TOVEY
January 13, 2010
Sydney tenants have been warned to brace themselves for a return to steeply rising rents as economists predict the sluggish rental growth of 2009 will end.
New figures from Australian Property Monitors, which is owned by Fairfax, show rental prices remained steady in the December quarter, with house and apartment rents in Sydney rising by only 2.2 per cent and 2.4 per cent respectively.
But an economist for APM, Matthew Bell, said a healthier economy, rising interest rates and land tax increases would all cause rents to increase at a higher rate in the coming year.
"It is clear that in 2009 rents were generally kept in a holding pattern as landlords and the market waited to see the end of the global financial crisis," he said.
"Sydney rents are likely to increase by at least double the 2009 rate of 2.2 per cent to approach the $500 per week level for houses.''
A Macquarie Group economist, Brian Redican, said incentives for first-home buyers in 2009 also would have lured many people out of the rental market, which would have lessened demand.
''That pressure valve won't be there in 2010,'' he said.
The slow growth in the December quarter was markedly down on the 2007 and 2008 figures, when rents rose by an average of 12 per cent each year.
During that period, the Herald reported real estate agents were having to extend normal inspection times to cope with large numbers of prospective renters.
But despite the flatter market last year, agents said interest from tenants had remained high.
''I don't know that it eased that much last year … there was still very high demand for property and quite low supply,'' Tim McKibbin, chief executive of the Real Estate Institute of NSW, said.
The drop off in rental growth was driven by the western, inner-west, south-western and upper north shore regions of Sydney, according to APM.
But rents did rise in the December quarter for houses in the eastern suburbs and lower north shore, regions with some of the city's most expensive rents.
Aaron Gadiel, chief executive of the Urban Taskforce, a lobby group representing property developers, said the dwindling supply of housing in Sydney would also continue to drive up rents.
''We're currently seeing the lowest levels of approvals for apartments, terraces and townhouses since 1987,'' he said.
But Mr Redican said an influx of new housing stock in the later part of 2010 should provide some relief and help stem price increases.
The Tenants Union of NSW said renters should be wary of predictions of rental increases especially from groups with a stake in the property industry.
Steep increases had been predicted in 2009 but had never eventuated, the policy officer, Chris Martin, said.
Sydney's average rental vacancy rate rose to a two-year high of 1.6 per cent in November 2009, according to the most recent figures from the institute.
The most recent data available from the Department of Housing, for the September 2009 quarter, showed rents for a two-bedroom flat increased from between 2.8 per cent to 6.5 per cent.
JOSEPHINE TOVEY
January 13, 2010
Sydney tenants have been warned to brace themselves for a return to steeply rising rents as economists predict the sluggish rental growth of 2009 will end.
New figures from Australian Property Monitors, which is owned by Fairfax, show rental prices remained steady in the December quarter, with house and apartment rents in Sydney rising by only 2.2 per cent and 2.4 per cent respectively.
But an economist for APM, Matthew Bell, said a healthier economy, rising interest rates and land tax increases would all cause rents to increase at a higher rate in the coming year.
"It is clear that in 2009 rents were generally kept in a holding pattern as landlords and the market waited to see the end of the global financial crisis," he said.
"Sydney rents are likely to increase by at least double the 2009 rate of 2.2 per cent to approach the $500 per week level for houses.''
A Macquarie Group economist, Brian Redican, said incentives for first-home buyers in 2009 also would have lured many people out of the rental market, which would have lessened demand.
''That pressure valve won't be there in 2010,'' he said.
The slow growth in the December quarter was markedly down on the 2007 and 2008 figures, when rents rose by an average of 12 per cent each year.
During that period, the Herald reported real estate agents were having to extend normal inspection times to cope with large numbers of prospective renters.
But despite the flatter market last year, agents said interest from tenants had remained high.
''I don't know that it eased that much last year … there was still very high demand for property and quite low supply,'' Tim McKibbin, chief executive of the Real Estate Institute of NSW, said.
The drop off in rental growth was driven by the western, inner-west, south-western and upper north shore regions of Sydney, according to APM.
But rents did rise in the December quarter for houses in the eastern suburbs and lower north shore, regions with some of the city's most expensive rents.
Aaron Gadiel, chief executive of the Urban Taskforce, a lobby group representing property developers, said the dwindling supply of housing in Sydney would also continue to drive up rents.
''We're currently seeing the lowest levels of approvals for apartments, terraces and townhouses since 1987,'' he said.
But Mr Redican said an influx of new housing stock in the later part of 2010 should provide some relief and help stem price increases.
The Tenants Union of NSW said renters should be wary of predictions of rental increases especially from groups with a stake in the property industry.
Steep increases had been predicted in 2009 but had never eventuated, the policy officer, Chris Martin, said.
Sydney's average rental vacancy rate rose to a two-year high of 1.6 per cent in November 2009, according to the most recent figures from the institute.
The most recent data available from the Department of Housing, for the September 2009 quarter, showed rents for a two-bedroom flat increased from between 2.8 per cent to 6.5 per cent.
