NSW rental supply below growth trends: Peter Chittenden

Peter ChittendenJune 29, 20150 min read

Figures from the Rental Bond Board appeared to show that the supply of rental accommodation was below growth trends for NSW. With this is mind what do the median rental statistics collected by the board reveal? 

A number of interesting trends emerge. In 2010-11 the areas with the highest median rentals were the South Sydney and Upper North Shore. However between 2011-12 up until the most recent figures for 2013-14 it has been the Eastern Suburbs that consistently records the highest median rents. 

In the Board’s figures the Eastern Suburbs covers a very diverse area across postcodes 2021-2036.

According the Board’s figures the median rental across this area is $610, and while rents have been on the rise, given the area’s diversity across suburbs like, Paddington, Moore Park, Little Bay, East Gardens, Vaucluse, Watsons Bay and Bondi the range of rents would be wide-ranging.

However what is more interesting is the general trends of median rents across the metropolitan area between 2010-11 and 2013-14, interesting because the figures show, somewhat surprisingly that the growth in median rents has been slowing. In 2010-11 the increase was 4.5% and in 2011-12 4.3%. However in 2012-13 the figure fell below 4% to 3.1% and in 2013-14 the increase was 2.9%. 

Over the same period there have been suburbs where median rental growth in the top five areas has been both above and less than the metropolitan figures. Looking at the Board’s figures here are some of the notable figures.

Rental Growth

All of the figures following are taken from figures published by The Renal Bond Board in its annual report.

In 2010-11 median rental growth across metro Sydney was 4.5% at $460.00, with some notable variations among the top three postcode groupings as follows: 

  • Eastern Suburbs, Lower North Shore & Mosman/Cremorne all increase by 10% to $550.00
  • South Sydney & Upper North Shore grew by 9.8% to $560.00
  • Inner Sydney 5.7% to $560.00 

In 2011-12 median rental growth was 4.3% to $480.00, and the top three postcode groupings were:

  • Many/Warringah grew by 5.8% to $550.00
  • Eastern Suburbs grew by 5.5% to $580.00
  • Lower North Shore grew by 4.5% to $575.00

Across this period it is notable that in three areas – Inner Sydney, South Sydney and Upper North Shore the Board’s figures showed no growth.

In 2012-13 rental growth fell to 3.1% to $495.00, the top three postcode groupings were:

  • Inner Sydney and South Sydney at 5.4% to $590.00
  • Eastern Suburbs at 3.4% to $600.00
  • Lower North Shore 1.7% to $585.00
  • Upper North Shore 1.7% to $570.00

Again it was notable that the Inner west showed no growth.

The most recent figures for 2013-14 growth fell again to 2.9%,a cross the metro region the median rental was $510.00 and the top three groupings were:

  • Inner West grew by 4.3% to $575.00
  • Many/Warringah at 3.4% to $580.00
  • Mosman/Cremorne at 2.5% to $590.00

In the same period rents on the Lower North Shore, according to the Board’s figures dropped by (0.9)%, which was the only negative result over the total period between 2010-2014.

Supply Catches Up

The big increases in 2010-11 (at 10% in some areas) have not been repeated, and this would appear to reflect more properties in particular apartments coming onto the market along with a rise in the number of investment properties being sold.

Currently the gap between the least and most expensive market is modest, based on median rentals $35.00 with Fairfield/Liverpool and Canterbury/Bankstown the most affordable and the Eastern Suburbs the most expensive market followed closely by the Inner Sydney and South Sydney, with both theses areas seeing a big increase in apartment developments.

It is also interesting to note that the gap between the least and most expensive rental markets has remain constant, although since 2010-11 the Upper North Shore has lost it’s spot as among the most expensive rental markets.

However we need to go to the country median rentals to see the most volatile figures, because in 2010-11 rents in Mudgee grew by 19.5% and in the following year by 14.1%, but in 2013-14 rents fell by (20%), which would largely reflect the changing fortunes of the mining industry. 

For the metro Sydney market, the demand for rental accommodation and rents continue to rise, although the patterns are not uniform. Some areas of the market have and will continue to see new developments added both as apartments and houses in new estates, as these remain popular with investors. 

The details and values outlined come from a very big pool of tenants as the Rental Bond Board looks after more than 726,337 tenancy bonds, and so the figures are a valid reflection of the wider rental market.

Given all of the activity across our property market in the last 12 months the Board’s report for 2014-15 should reveal some interesting trends.

To read the final part of Peter's two-part post, click here.

Peter Chittenden is managing director for residential of Colliers International. He can be contacted here.

Peter Chittenden

Peter Chittenden is managing director for residential of Colliers International.
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