Sydney Greater Metropolitan Region Rental Market Overview
Strong gains in the median rent price of a one bedroom unit was recorded in the middle and outer rings of the Sydney Metropolitan Region, with the Canterbury Council median rent increasing by an average 11.8% per annum over the five years to December 2011. The Ku-Ring-Gai Local Government Area (LGA) recorded strong average five year growth of 22.6% per annum for the lodgement of new bonds as a result of tenants moving into new apartments on and near Pacific Highway and Mona Vale Road.
Interesting to note that one bedroom apartments were no longer confined to inner city suburbs, and are now important components in new developments in middle ring council areas like Canterbury and Rockdale, with affordability being the most likely reason for this shift.
Strong growth in rent prices was recorded in the Fairfield, Liverpool and Campbelltown City Council areas, where the median rent for a two bedroom unit increased by 10 per cent or more per annum since December 2006, due to the supply of new medium density stock. In the City of Liverpool, demand for units was also attributed to a strong growth in population, equating to an average of 2% per annum in the five years to June 2011, compared to 1.1% per annum for NSW as a whole.
The City of Sydney recorded the highest rent price for both one and two bedroom units, with a median rent of $500 and $670 per week respectively. The City represents the largest unit rental market in NSW, with 30,139 government rental bonds held as of December 2011. Sydney was closely followed by the Waverley LGA with a weekly rent price of $488 (one bedroom unit) and $630 (2 bedroom unit). Other LGAs to appear in top 10 highest rent price lists were Woollahra, Canada Bay and North Sydney, which represents the third largest unit rental market in the state, with 11,359 government-held bonds.
Outside of the Sydney Metropolitan Area, both Cessnock and Maitland LGAs recorded a significant increase in the lodgement of bonds for strata-titled dwellings, with Maitland also recording one of the strongest five year average growths at 10% per annum for a two bedroom unit. The growth stems from large infrastructure projects that draw a transient population of construction workers, and from mining employees relocating to the Hunter and choosing to rent in the short term. The highest rent price was paid in the Newcastle LGA, where a two bedroom apartment recorded a median rent of $320 per week. The City of Wollongong made up the largest rental market outside the metropolitan area, with 7,244 bonds held at December 2011.
Given the strong growth in rent prices in the middle and outer rings of Sydney and regional areas of the GMR, and the increasingly restrictive rent prices in Sydneys inner ring, it is likely that lenders will continue their support for medium density developments in areas that until recently represented higher investment risk. This in turn will ensure that developers maintain a full project pipeline in the outer and regional parts of the GMR.