Money: Tenants’ should flex their power in Sydney as rent remains high’ - PressFrom - Australia
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Money Tenants’ should flex their power in Sydney as rent remains high’

16:26  11 october  2018
16:26  11 october  2018 Source:   msn.com

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“For any Sydney tenants , the power has swung in their favour,” she added. “The stock levels are likely to continue to rise and tenants need to use that Median weekly house rents in Sydney remained steady over the September quarter and year at 0 per week. The decline in rental price is growth is

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The property market in Sydney may be difficult to buy into, but for the rental market, the power now lies with the tenants and not the owners.

That is what a new report by Domain suggests with rental prices across Australia’s capital cities largely flat over the September quarter, with Perth the cheapest city to rent in while Sydney and Canberra earn the title of most expensive.

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Here is a round-up of how the rental market is faring across the country.

Sydney

The median unit rents in Sydney declined 0.9 percent over the quarter, also declining year-on-year for the first time since Domain started recording rental prices in 2004.

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“There’s more rental choice in the unit rental market – there’s 20 percent higher stock level for units,” Domain Senior Research Analyst, Dr Nicola Powell told 9Finance.

“There’s more competition between landlords meaning there are some incentives at play in the marketplace as landlords want to attract and retain good tenants. They are starting to offer discounts on asking rents.

“For any Sydney tenants, the power has swung in their favour,” she added.

“The stock levels are likely to continue to rise and tenants need to use that negotiating power, and the fact that they have greater choice.”

And for Sydney renters wanting a house – there is hope there too.

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“Sydney houses have flatlined for a year-and-a-half and we could see some rental easing as stock levels have been impacted,” Dr Powell said.

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Median weekly house rents in Sydney remained steady over the September quarter and year at $550 per week.

The decline in rental price is growth is driven by a “combination” of factors, Dr Powell explained, including first home buyer activity taking away rental demand as it releases rental supply.

“We’ve seen heightened investor activity and the peak of development in Sydney, with peak of building completion as off-the-plan buildings settle and come onto the rental market,” she said.

Melbourne

In Melbourne, weekly rents remained flat for the quarter at $430 for houses and $410 for unites however over the year house rents have grown 2.4 percent, while unit rents are up 2.5 percent.

“The rental market is tighter in Melbourne than in Sydney,” Dr Powell said.

“The slow down of rental growth in Melbourne will mean better conditions for tenants. What’s quite interesting is Melbourne is experiencing record levels of investment and activity but stock levels are still continuing to fall.”

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Available houses to rent have been falling for the past four years, she said, while units available to rent have also been declining.

Dr Powell believes this is due to “unprecedented” interstate and overseas migration.

“The unprecedented influx of new residents from overseas and interstate has placed additional demand on the rental market, which has led to heightened competition for rental accommodation,” she said.

“The impact from the Victorian Government's recent rental reform is also yet to be seen. It could have an adverse effect on Melbourne’s rental landscape, with landlords opting for shorter-term leases or selling up. However, the overall impact on the rental market is likely to be minor.”

Canberra

Australia’s capital sits alongside Sydney as the most expensive city to rent a house.

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Median weekly house rent remained steady at the record of $550, which was first reached in the June quarter.

But Dr Powell was keen to put Canberra’s prices into context.

“In Canberra, $550 would get you a larger home, close to the CBD, in comparison to what $550 in Sydney would get you for a house,” she said.

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Over the year, house rents have increased by 8.4 percent while unit rents have increased 7.1 percent.

For the September quarter, unit rents were flat at $450 a week, a record that has been maintained for the entire calendar year.

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Available houses to rent have hit a five year low, while units available to rent are at two years low, on par with trends in Sydney, Dr Powell said.

“We may see the point where house rents are higher in Canberra than Sydney because Sydney is seeing increase in stock and that will play out in price,” she said.

“If the two markets continue on the same trajectory, we could definitely see house rents higher in Canberra. Canberra average wages are also higher than Sydney.”

However, there are concerns “weighing heavily” on investors in Canberra – rising rates, investor land tax – which could see them “increasing their asking rents or opting for higher yielding options such as short-term leasing”, Dr Powell said.

Brisbane

Median weekly house rents remained stable in Brisbane over the September quarter and year at $400 a week while unit rents were up 1.4 percent over the quarter and year to reach $375 per week.

“Apart from a couple of fluctuations, tenants in the sunshine state have enjoyed four years of steady house rents at $400 a week - this is the longest period of stability in Brisbane’s rental history. The unit market appears to have had a minor turnaround, with rents increasing for the first time in two years,” Dr Powell said.

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“Brisbane’s advertised rental stock slipped as a result of the unprecedented inner-city unit development slowing. The state experienced a decade high level of internal migration, with Brisbane becoming one of Australia’s fastest growing city populations. All signs point to a broad tightening of the rental market.

“We may also see Sydney and Melbourne investors, dissatisfied with falling property prices, looking north for better yields and growth prospects, as well as seeking lower entry-prices and holding costs.”

Perth

Perth retains its crown for most afford capital city to rent in with no changes to house and unit rents over the quarter or year.

The city’s median house rent continues to sit at $350, while units are $300 a week.

It is the sixth consecutive quarter of flat unit price for Perth.

“Tenants have been reaping the benefits of falling rental prices since 2014,” Dr Powell said.

The fact prices held steady is “one of the first signs of positivity for investors in the Perth market” following deterioration since 2014 following Western Australia’s challenging economic conditions.

Rental listings have begun to dwindle for over a year now in Perth, with Dr Powell warning Perth tenants will find themselves with less rental choice.

“A broader tightening of the rental market appears to be occurring due to a slowdown in dwelling commencements and investor activity remaining relatively stagnant. This has seen tenants absorb the existing rental stock,” she said.

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But Dr Powell is confident Perth “will remain one of the more affordable” capital cities to rent in.

Adelaide

Adelaide is the second most affordable city for tenants, despite house rents increasing 4.2 percent over the year. They held steady over the quarter at $375 a week while units had an average weekly rent of $300 per week, up 1.7 percent year-on-year.

“Adelaide’s rental market appears to be tightening with advertised stock levels declining. If rental supply continues to track lower in the coming months it will create greater competition between tenants, which will drive up asking rents,” Dr Powell said.

“Despite rental prices rising, Adelaide remains one of the more affordable rental markets. For investors, the city offers more favourable yields relative to the other Australian capital cities.”

Hobart

While Hobart used to be an affordable city to rent in, Tasmania’s capital is no longer on the affordable end of the rental list, with the city experiencing the highest annual growth in weekly house rents, up 10.8 percent to $410 per week.

Hobart was the only capital city to record double-digit rental growth and while unit rents did decline over the quarter by 2.8 percent to $350 a week, annually they have grown by 9.4 percent.

“The significant momentum that built in Hobart’s competitive rental market over the past two years appears to be easing,” Dr Powell said.

“Available rental stock has marginally increased, which is anticipated as the city has seen an increase in housing developments alongside heightened investor activity. Despite recording the strongest annual rate of growth of the Australian capital cities, the pace of growth is now slowing.”

And while rents have increased in Hobart, Dr Powell did acknowledge that compared to the mainland cities, “Hobart is cheaper”.

“Anyone priced out of the eastern cities will find Hobart relatively affordable,” she said.

Darwin

To the Northern Territory, Darwin house rents held steady over the quarter and year-on-year were down 3.8 percent to $500 a week.

Unit rents in Darwin experienced no quarterly or annual change, holding steady at $400 a week for the first time in four years.

“For investors, a softening sales market continues to improve unit gross rental yields, almost pushing them back to the record highs achieved in 2004 and 2005. A turnaround in rental demand for the city is largely dependent on economic growth, jobs creation and an improved population growth,” Dr Powell said.

“The Northern Territory Government has announced a revitalisation of Darwin’s CBD with an aim at enhancing liveability, and offering key workers financial incentives to relocate. The impacts from the initiatives remain to be seen but the long-term approach to addressing population growth are likely to support rental demand.”

Rental Yields

For investors, there is good news from a national perspective with rental yields increasing by 0.4 percent over the past years months to 3.76 per cent for houses while units were up 1.5 percent over the year to 4.29 percent.

Hobart  continued to provide the best gross rental yield for houses at 4.94 per cent while Darwin and Canberra provided the highest gross rental yields for units at 6.08 per cent and 5.95 per cent respectively. Sydney and Melbourne continued to record the lowest gross rental yields for houses and units.


Your 10-second guide to today's RBA interest rate decision .
The Reserve Bank of Australia (RBA) will announce its October interest rate decision later today. With next to no chance the cash rate will change, all attention will once again be on accompanying monetary policy statement released by Governor Philip Lowe. With next to no chance the cash rate will change, all attention will once again be on accompanying monetary policy statement released by Governor Philip Lowe. Given its been less than a month since the RBA last met, and with limited new information on the key areas of inflation and wage growth released during this period, there's unlikely to be widespread changes in the RBA's views.

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