Sydney Rental Prices are set to skyrocket even more in the year ahead
The price for renters – already under huge pressure from costs and lack of rental supply – is going to get worse.
There are several reasons Sydney Rental Prices are set to get even worse.
The price of rent in Sydney’s best suburbs is set to skyrocket even more, as supply can’t keep up with demand and a lack of new homes forces up prices in areas like the inner-west, eastern suburbs and north shore areas.
“Tenants in areas where not many new homes are being built would have (fewer) options,” BIS Oxford Economics analyst Angie Zigomanis said.
Rising Interest Rates
Property investors and owners will need to find ways to pay back mortgages as banks squeeze mortgage holders and interest rates rise in 2018, other analysts said.
A former Reserve Bank boss claims the RBA will need to raise interest rates multiple times over the next few years, with rates climbing as high as 3.5% within 2-3 year period.
With interest rates set up climb in the months ahead, landlords will need to generate new earnings and rents are likely to follow rapidly. They may get their way, with less people buying due to interest costs, only those in strong positions may be able to maintain a mortgage in the coming years.
Ambitious Real Estate Agents
Another reason Sydney Rental Prices are set for steep jumps in the months and years ahead is a renewed sense of confidence by real estate agents that they can push up rental prices in the market.
“Agents get more confident if other agents have pushed up rents successfully. It encourages them to do the same and that lifts the whole market up,” Nathan Birch from Blink Property Management told REA.
Market Cycle Set for Jump
Another reason Sydney Rental Prices are set for a climb could be that the market conditions are set for anther price hike.
“We’re probably at the point in the real estate cycle where rents would be going up soon anyway. Real estate usually follows a pattern. Prices go up first. Then rents go up,” Mr Birch said in his analysis.
Current Sydney Rental Yields Bad for Investors
Sydney has a rental property yield of just 2.8% – record lows.
Investors in the Sydney property market looking for good returns on their property through rent actually won’t be that happy.
Although capital growth remains robust, it’s rental yields that are disappointingly low.
This could lead to Sydney property investors to decide not to add new supply or find ways to secure better yields by testing the market with higher rent prices.
Sydney wages growth
Sydney wages growth is simply not keeping up with the cost of living and the cost of rents. In fact, wage growth is now at near record lows!
With the projected upward pressure of rent prices, getting ahead for renters and young workers is getting nearly impossible.
It’s all about greed and Sydney renters are going to pay dearly.