Tight conditions in Sydney rental market
While this might create a tough situation for renters, owners of rental properties in the New South Wales capital will likely be rejoicing.
Over March, the Real Estate Institute of New South Wales (REINSW) recorded a 0.3 per cent drop in the number of available properties for rent in Sydney. Currently, the vacancy rate for the Sydney region sits at 1.4 per cent.
REINSW President Malcolm Gunning noted in an April 23 statement that vacancies in the Sydney market haven't reached a low level like this since the end of 2011, showing just how strong the rental market is in the state capital.
"Sydney is going backwards in regard to properties available for rent. Something must be done to ensure that there is a greater level of choice for those seeking to secure a rental property in Australia's biggest city," he explained.
The inner suburbs of Sydney are currently the hardest areas for renters to find accommodation, as the vacancy rate is only 1.3 per cent. Renters are likely to fare better when looking for homes in the middle and outer suburbs, although vacancy rates are still tight.
Prices and values grow
A plummeting vacancy rate in Sydney is not unsurprising, as house prices and values have been on the rise for quite some time. As a result, this activity has priced some first time buyers out of the market and opened up opportunities for property investors to secure lucrative investments instead.
Recent figures from RP Data found that over the 12 months to March 2014, dwelling values in Sydney increased by a large 15.6 per cent - ahead of all the other states and territories in Australia.
With a median price dwelling of $630,000, Sydney is a leap ahead of other state capitals, such as Darwin at $547,000.
"Sydney dwelling values are now 15.8 per cent higher than their previous peak, substantially more than Melbourne where dwelling values are 4.7 percent higher than their previous peak," noted RP Data Head of Research Tim Lawless in an April 1 statement.
As prices are rising quickly in Sydney, many people may turn to rent accommodation rather than buy in the city. Not only does this help to provide investors with a bigger pool of tenants, but the opportunity for rents to increase due to demand.