Sydney rental market tightens to 1.9% vacancy rate with warning of "dire" economic consequences

The Sydney rental market swung even further in favour of landlords in February with the overall metropolitan vacancy rate tightening from 2.2% to 1.9%.

The rental market tightened noticeably in the outer suburbs (more than 25km from CBD) and the middle suburbs (10-25km from CBD), which both recorded a 0.4% reduction in their vacancy rates to 1.8% and 2% respectively, according to the 2013 Real Estate Institute of NSW (REINSW) Vacancy Rate Survey.

The vacancy rate in the inner suburbs (0-10km from CBD) was unchanged at 2%.

“The residential rental market has contracted during February, in line with our expectations,” said REINSW president Christian Payne.

“The market will continue to tighten due to the lack of supply caused by the Government’s failure to provide appropriate incentives to invest in the property market.

Since July 1, the NSW government has provided investors and other non-first home buyers with a $5,000 grant under its  NSW New Home Grant Scheme available to homes bought off the plan or newly built, with a value up to $650,000 and to buyers of vacant land that is intended to be the site of a new home valued up to $450,000.

This replaced the far more generous NSW home builder bonus, which offered potential savings of $22,490 under stamp duty exemptions for new homes not exceeding $600,000 and vacant land not exceeding $400,000. 

The scrapping of this scheme was announced on June 12 last year given investors and owner-occupiers just 18 days to finalise their off the plan purchases.

“This dire situation will not resolve itself. We need action today from the government to address the inadequate, expensive and complex planning system, and an inequitable property tax regime, " says Payne.

“If not remedied, the crisis will continue to have significant negative impacts on the future prospects of NSW both economically and socially,” Payne said.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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