TOUGH economic conditions pushed Sydney’s inner city residential vacancies to their highest rate this century, as tenants sought an escape from high rental rates.
The REINSW Vacancy Rate Survey results for June Sydney-wide vacancies grew for a fourth consecutive month, up 0.4% to now sit at 4.5% – a 1.5% surge since March.
The inner ring experienced the most significant change, rising 0.8% to 5.8%, after exceeding the 18-year high in May. Inner ring vacancies sat at just 2.5% in March.
“Looking back at more than 20 years of survey results, we’ve not seen vacancy rates this high,” REINSW chief executive officer, Tim McKibbin said.
“It really is staggering.”
He said the impact of COVID-19 on the residential rental market continues to be significant and shows no sign of abating.
“As unemployment continues to rise and with the end date for JobKeeper and JobSeeker benefits looming, affordability is at the forefront of many tenants’ minds. It’s really no surprise that inner-city properties with higher weekly rents are being relinquished in favour of more affordable options.
“For Sydney’s inner ring, if this trend continues, as it’s likely to for the foreseeable future, we can expect to see downward pressure on rents. While this is great news for tenants, it’s a recipe for disaster for many landlords.”
Middle ring vacancies increased 0.6% to 4.6%, and Sydney’s outer ring was recording a small decrease to 2.6%.
The SQM Research weekly rents index showed house rents across Sydney fell 0.4% over the month to 4th July and by 1.3% for units, for respective annual falls of 6.4% ad 6.1%.
Regional areas have fared better in terms of vacancies, according to REINSW. The Hunter region dropped by 0.6% to sit at 1.8%, and the Illawarra region firmed 0.5% to 3.1%.
Other regional areas also recorded significant drops including Albury (by 0.6%), central west (0.5%), Coffs Harbour (0.6%), mid north coast (1.2%), Murrumbidgee (1.2%), New England (0.8%), Orana (0.6%), Riverina (1.3%) and the south east (1.0%).
McKibbin said the results “really do tell two very different stories, with Sydney’s inner suburbs continuing to suffer while Sydney’s outer suburbs and regional New South Wales appear to be largely unaffected by COVID-19 to date”.