Just Rent Sydney
This quarter we saw the RBA (reserve bank of Australia) raise interest rates for the first time in 18 months, the RBA cash rate stands at 3.25%. The rapid and dramatic slashing of interest rates earlier this year has been very favourable to property investors. Mortgage repayments have been reduced by up to half for some investors, helping to bump up the total yields on their investment properties. This favourable environment has been luring savvy investors back into the Sydney property market. For the first time in a long time there are opportunities for positively geared property in the Sydney real estate market. The drop in the first home owners grant has reduced the demand from this segment of the market; however investors are more than making up for this returning to property on mass.
Median Weekly Rents/Yields Sydney*
Units Houses Unit Yields House Yields
October 08 $420 $445 5.18% 4.43%
October 09 $415 $450 5.18% 4.55%
The current average weekly rent for Sydney houses stands at $450 per week (up slightly from $445 a year ago) a rise of 2.6% year on year. The average weekly rent for units is currently $415 per week (down a touch from $420 a year ago) a fall of 1.2% year on year. This gives an average gross yield for house and unit of 4.55% and 5.18% respectively.
The reduction of the first home owners grant at the end of September is a significant factor in the rental market. This reduction of the grant in turn reduces the attractiveness of buying over renting.
The increase in interest rates also dampens first home owners forcing many to remain as tenants till they can more comfortably afford to purchase their first home.
Short term and long term migration rates along with high birth rates continue to push the population along strongly, creating a continued gap between dwelling supply and demand. This population growth will assist in pushing rental price up.
• Data courtesy of Australian Property Monitors
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