Rent prices nationally have been fairly steady across houses and units over the last quarter, but one market is seeing falls.
In Sydney, median house rent prices are 4.5 per cent below where they were a year ago, reaching $525, and median unit rent prices are down 4.6 per cent to $520, according to Domain’s rental report.
And Sydney’s west, where investors purchase properties specifically for the purpose of renting them out, have seen the biggest drops.
“The west is an affordable area in Sydney,” Eliza Owen told Yahoo Finance.
“It’s one way investors can get into the market relatively cheaply, and because there’s high demand for rental households, the strategy in mind might be that you can get a decent rental return on a relatively cheap property.”
But investors are losing now as rental prices in western suburbs continue to fall, she said.
“Canterbury, Bankstown, the south-west and Western Sydney had the biggest year-on-year declines at almost 6 per cent.”
And it’s due to new supply in the rental market: with more supply and more stock in the market and plenty of choice, landlord have had to put rents down to try and attract tenants.
“It does present a problem for someone who maybe bought at the peak of the market and they’re finding it harder to get a tenant,” said Owen.
It’s not all bad news, though.
“It’s important to note that there have also been price falls. So, as a percentage of the purchase price, the rental returns haven’t come down that greatly,” she said.
I’ve invested in Sydney’s west – what do I do?
“Long term, Sydney needs about 40,000 dwellings a year just to keep up with the projected population growth across Sydney,” Owen said.
And, longer term, Owen said the moderation in development that we’ve seen recently will create demand pressures.
Investors should not make any impulsive moves, she suggested.
“Essentially, investors need to ride the wave at the moment.”
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