Highest Surge of 13%! Sydney’s Inner West Apartment Rentals Lead Australia, Supply-Demand Mismatch in Focus – Sydney Auction Clearance Rate Reaches 72%

Week’s Key Focus

According to “Australian Financial Review” reports, rental prices in inner-city areas of all major Australian capitals are expected to continue rising next year, with the highest surge reaching up to 13%. This phenomenon is attributed to a severe shortage of available rental properties. Over the next three years, the Australian capitals collectively require 570,000 new apartments, but currently, only 55,000 are being constructed annually. Despite some signs of rental growth slowing down in certain leasing markets, the mismatch between apartment supply and demand will drive a sustained increase in rents in city center regions.

Sameer Chopra, the Pacific regional director of CBRE research, pointed out that the rental demand for apartments in Sydney is projected to increase by 34,100 units next year, while only 15,300 new apartments are expected to be supplied. Melbourne, Brisbane, Perth, Adelaide, and other cities will also face corresponding supply gaps. It is estimated that the apartment vacancy rate in most areas across Australia will decline by 0.2% to 0.5% in the next 12 months, with 80% of areas already having vacancy rates lower than 1.5%, making it a key driving force for future rental growth.

Specifically, the rental surge is expected to be highest in Sydney’s inner west and Brisbane’s northeast, at 13% and 10% respectively. These two areas are experiencing much higher demand than the current supply of rental properties, which could lead to even higher rental increases. Other areas such as West Brisbane, Melbourne City, Melbourne Inner East, Sydney CBD, Perth’s northeast, St George, South Brisbane, and Canterbury-Bankstown are also projected to see a rental increase of 9%.

However, the rental rise in North Adelaide, Belconnen (Canberra), and Sutherland Shire (Sydney) is expected to be more moderate. Data from CoreLogic indicates that the quarterly rental growth across Australia slowed to 2.5% in the second quarter of this year, the first time since November last year.

Tim Lawless, director of research at CoreLogic, stated that although the vacancy rate remains below average, rental increases in most inner-city areas seem to have plateaued. The high demand will continue to support the rental market, while the increase in supply has not been substantial enough to meet demand, causing many renters to approach or reach their rental affordability limits. For those with some financial capacity, more renters may opt to transition to home ownership.

Auction Results This Week

Sydney: 636 properties were auctioned, with 411 results reported, 297 properties sold, and a clearance rate of 72%. The total value of auction sales amounted to 318,095,488 Australian dollars, with a median house price of 1,460,500 Australian dollars.
Melbourne: 700 properties were auctioned, with 464 results reported, 335 properties sold, and a clearance rate of 72%. The total value of auction sales reached 300,723,422 Australian dollars, with a median house price of 1,027,500 Australian dollars.