Sydney rent forecast: $2,000 a week to be new norm in some areas – realestate.com.au

New forecasts have revealed that paying rent above $2,000 a week will become the norm for renters in many parts of Sydney by the middle of the next decade.

These massive rents will eat up more than $104,000 a year in household incomes – which are not expected to rise sharply.

Experts are warning renters who may be considering buying a first home to escape rent increases.

Modeling price data using SQM Research forecasts revealed that the average rental price of homes in the city would be $1,048 per week in 2035, compared to $800 today. This would add an average of almost $13,000 to annual rents.

Rents per unit were forecast to average $983 in ten years, up from $750 currently – or about $12,000 higher per year.

Rent increases would be significantly higher in Sydney’s eastern suburbs. Rents for homes in Bellevue Hill are expected to average nearly $5,000 by 2035, compared to $3,500 currently.

The current median of $2,925 for rental properties on Longueville’s North Shore is expected to rise to $4,166.

The modeling was based on forecasts of two to four percent annual rent increases in Australian capital cities over the next year, which would be roughly in line with inflation.

SQM Research founder Louis Christopher said tenants could get some reprieve as construction activity increases.

Those who left the rental market would be better off, he added.

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Enaya Anani in her rental home in Peakhurst, Sydney. Photo: Justin Lloyd

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“If you have the opportunity to come in as a first-time home buyer, you should look at it seriously,” he said. “Yes, the market will pick up over the next year, but I think the way things have gone for renters who became first home buyers has been better than for those who remained renters, and I don’t see that changing anytime soon.”

Tenants say they are already struggling. Peakhurst mother-of-two Enaya Anani said the pressure on affordability has become a growing source of concern for her.

She had to move at short notice for the second time in two years, despite having applied for a long-term lease, because the landlords or their relatives moved in.

Ms Anani said it was simply a challenge to secure a family home that was not “dilapidated”.

“The prices out there are just ridiculous for homes that are just not livable,” she said. “You can’t find anything decent that costs less than a thousand dollars.

“Going to inspections, the number of people applying there, your chances are so slim.”

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Enaya Anani said it was simply a challenge to secure a family home that was not “dilapidated”. Photo: Justin Lloyd

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Ms Anani has now approached tenant advocacy group The Rent Fairy to help her find a home and said she felt discouraged by what she would have to pay in rent in the coming years.

She asked how parents “are going to afford to pay the rent, live, put food on the table, pay the bills and try to raise their children?”

Rent Fairy founder and director Sarah Elkordi said renters were being pushed from inner suburbs to more affordable suburbs as their incomes could not keep up with rent increases.

“I think the biggest impact will be on the vulnerable groups, people aged 18 to 25 entering the rental market, students, single parents like me – and people moving to Australia,” she said.

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According to Sarah Elkordi of The Rent Fairy, renters are already moving to more affordable areas, and they will continue to do so

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Ms Elkordi said customers are leaving suburbs such as Darlinghurst, Erskineville and Double Bay after rent increases, while western Sydney hubs such as Parramatta and Kellyville are attracting demand – often for homes with rental prices comparable to some inner-city one-bedroom properties.

Ms Elkordi said faster housing approvals would help lower rents. “They are ordinary people who just need a place to live and they simply cannot afford the rents anymore.”

Ben Kingsley, chairman of the Property Investors Council of Australia (PIPA), said rents would not rise as much as predicted if governments helped expand housing availability.

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A crowd queuing for an open inspection of a rental property in Bondi. Photo: NCA NewsWire / Flavio Brancaleone

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He said the supply would ultimately limit rental growth if a situation arose where landlords had to compete with each other.

“Ultimately, prices will still be determined by supply and demand – so if there is a strong availability of rental properties, it will be difficult to increase rental prices as tenants will move to cheaper rental properties,” Kingsley said.

PIPA advises members and landlords to aim for rent increases well above the CPI, and recommends rent increases of four to five percent in markets with low vacancy rates, rising to five to six percent rent increases as taxes and costs rise.

TOP FIVE MOST EXPENSIVE PRICE PREDICTIONS FOR 2035 IN SYDNEY LOCATIONS:

Suburbs Median rent today Median rent 2035

Eastern suburbs

Bellevue Hill $3,500 $4,985

Vaucluse $3,400 $4,843

Tamarama $3,200 $4,558

Dover Heights $2,898 $4,128

Double Bay $2,725 $3,881

North Sydney and Hornsby

Longueville $2,925 $4,166

Mosman $2,200 $3,133

Castlecrag $2,000.00 $2,849.00

Northbridge $1,865 $2,656

Kirribilli $1,850 $2,635

Northern beaches

Cash $2,798 $3,985

Balgowlah Heights $2,300 $3,276

North Balgowlah $1,970 $2,806

Male $1,950 $2,777

Seaforth $1,900, $2,706

Inside West

Drummoyne $1,400.00 $1,994

From $1,400 to $1,994

Rodd Point $1,350 $1,923

Russel Lea $1,300 $1,852

Birchgrove $1,300 $1,852

Source: SQM research