Rents Falling in Sydney
Sometimes trying to understand how the property cycle works can be pretty basic. We haven’t been able to avoid the media hype over the last couple of years on the booming Sydney market. It has been growing at what some have described as an alarming rate, in some suburbs by over 100% in just the last 5 years, in others over 30% in just one year.
With this massive demand, it’s pretty predictable that developers would be out there building as much as they possibly can ‘making hay while the sun shines’.
Now can it be much of a surprise to read that 61,000 new apartments will be completed between 2015 and 2017 throwing the rental market into an oversupply situation?
With oversupply, renters now have much more choice and landlords must lower their expectations on what rent is achievable, so it’s now a ‘renter’s market”!
Yields, that is rental income, is now so low in Melbourne and Sydney; reported at just 2.6%, the lowest on record in Melbourne and not much more in Sydney, that investors are walking away from the market. If we do not have the buyers, then the developers will stop building; over a few years, rental property will start to become scarce again and yields will start to rise. When yields approach 4.5% – 5% of purchase price, investing may seem like a good option and investors will start returning to the market and thus cause price increases again.
How long will this all take? History shows that the next growth cycle will probably be in around 5 to 6 years depending on economic and population growth.
Brisbane, however, unlike Melbourne and Sydney, is still very attractive for investors with yields of over 5% still attainable on many new investment properties.
Read more: www.propertyinvest.co/media or http://www.domain.com.au/news/sydney-apartment-rents-fall-as-building-boom-takes-toll-domain-group-20160113-gm3umw/
~ Lime Property Solutions
