What has been happening with Sydney unit rentals recently?

Hi Margaret,

Can you tell me what has happened to unit rentals in Sydney over the past two years?

Your advice is appreciated.

Kind regards,

Peter

Hi Peter,

This is almost like asking ‘how long is a piece of string!

‘Sydney’ is a very large place and unit rentals can vary greatly from area to area, depending on many things including current demand, current and future supply, housing affordability, demographics and population growth.

For example, rents in Double Bay are 15% higher than last year while those in Mosman are 2% lower.  Cronulla sits 1% lower than last year while Alexandria sits 3% higher.  Woolloomooloo is 7% lower while Parramatta is 4% higher.

As an investor, it's crucial that you have a wider view of what you are buying and you must consider many aspects alongside potential rental yield. Look at areas where the population is growing faster than average but relatively few new developments are planned.

Consider buying in suburbs which have a lot of future infrastructure plans and where it seems that the services required by the demographics of the area are considered and being supplied.

And, more importantly, don’t buy a unit just because it seems to have a good yield, or it feels like a ‘cheaper’ way to get into the market.  In some areas the units grow better than the houses and in others the reverse is true. 

This is related to the kinds of people who live there – in family oriented areas houses will always get better growth and better yields, while in areas targeting couples or singles it will most likely be the units which present the better buy. 

Buying the wrong property type for the demographics could lead to a bad investment in an area which otherwise might have presented a good opportunity.

Regards,

Margaret

She is the founder of Destiny.

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