Sydney’s 10 most vacant suburbs

While the Aussie construction boom just keeps on giving, its consequences aren’t all positive as the nation’s largest city is beginning to suffer the early stages of oversupply, and some suburbs are suffering more than others.

According to Domain Group senior economist Andrew Wilson, Sydney’s apartment vacancy rate rose by 0.2% during May to 2.2%.

Also read: Does Australia have a greater housing oversupply than the US?

Meanwhile, Parramatta, which had the highest total number of vacancies of any Sydney suburb at 156 empty apartments in May, meaning its vacancy rate jumped to 2.4% over the month.

“It’s a big rise in the vacancy rate over just a month, but really it’s no surprise given the extraordinary level of development there,” Wilson said.

“We’ve still got the bulk [of apartment completions] to come onto the market. Numbers are accelerating rather than decelerating with a lot left in the pipeline.” 

But he does not expect a Sydney-wide oversupply problem, but instead “pockets” of the city facing the issue.

But provided the rest of the city remains under supplied, tenants are expected to eventually move into oversupplied areas to get cheaper rates of rent.

A recent JLL report predicted that as many as 61,000 new units would be completed in 2015-17, a significant jump from the 44,500 units completed in 2012-14.

In fact, some Sydney real estate agents expect that the vacancy rate will rice to 3.4-4.0% within the next few months as this oversupply issue exacerbates further.

Also read: 120 Aussie suburbs could be set for a price plunge

Parramatta-based Just Think Real Estate agent Edwin Almeida told Domain Group that the apartment oversupply is more widespread that just in Paramatta.

He added that there could also be pain ahead for investors with properties in Homebush West, Campsie, Bexley and Hustville.

“Rent is coming down slowly and landlords who don’t decrease their rent will stay on the market for longer,” he said.