HIA Media Release on Sydney Rental Market

[ani]

12 October 2005

SYDNEY FACES RENT CRISIS

Sydney councils have been urged to speed up approvals for new apartments
as Sydney is caught in the grip of a looming rental crisis.

New research by Australia’s Peak Building Industry Group, HIA, reveals that
within the next 18 months, Sydney will quite literally run out of vacant rental
stock.

HIA’s NSW Executive Director Wayne Gersbach said that with Sydney rents
already increasing faster than inflation, urgent and immediate action must be
taken to get apartment and medium density projects into the construction
pipeline rather than being locked up in councils at the approval stage.

“While the merry-go-round of arguments relating to planning, zoning, and
sustainability continue, the unstoppable force of housing demand will further
drive up rents and squeeze modest and low income earners,” Mr Gersbach
said.

“Sydney’s supply of rental dwellings increased by only 14,500 in 2004/05,
down 13 per cent on the previous year and sending the rental vacancy rate
plunging from 3.6 to 2.5 per cent,” he added.

“With rental investment lending in NSW still down some 40 per cent on 2 years
ago, and with 14 consecutive months of sub-2000 new unit approvals, it is hard
to see us adding more than 10,000 new properties to the rental stock over the
next year.”

At this rate, the Sydney rental vacancy rate will plunge to zero by Christmas
next year.”

“Clearly this pressure will drive up rents, affecting savings and consumer
spending at a time when the NSW economy is already spluttering. More
importantly however is the negative impact it will have on housing affordability,
as those rental households who aspire to home ownership see their savings
eroded,” Mr Gersbach said.

“With an estimated 4,200 flats, units and apartments stuck in Sydney local
councils at present, some of which have been waiting final approval for over
two years, urgent and immediate action must be taken to not only get them
signed off, but to minimise the additional conditions and sustainability
requirements that typically add tens of thousands of dollars to the final price of
each unit.”


Website: http://economics.hia.asn.au

 

[thefirstbruce]

Well, one solution is for people to find work away from Sydney, until companies can't fill jobs. That will put upwards pressure on wages, then employees will be able to afford rental increases.

Seriously, though, we do need to decentralize employment opportunities. That's the smartest solution to the Sydney affordability disequilibrium issue. Even Bernie Fraser says so.

 

[Ray Brown]

Well, one solution is for people to find work away from Sydney, until companies can't fill jobs. That will put upwards pressure on wages, then employees will be able to afford rental increases.

I recently had to briefly consider a job offer in Sydney paying about 55K.

And I mean briefly...

That salary goes considerably further in regional QLD, not to mention a better lifestyle.

I agree with your theory about upward pressure on Syd wages.

 

[depreciator]

So the building industry is saying we need more building to happen. Gee, what a surprise.
I suspect next Christmas when vacancy rates will supposedly plunge to zero there will still be plenty of vacant flats around Sydney, particularly in the bleak, windswept precincts of Alexandria, Zetland, Moore Park, Wolli Creek etc.
Scott

 

[thefirstbruce]

Ray, 55k in Sydney is an insult. Tell them to hire a monkey.

 

[Peter 14.7]

So the building industry is saying we need more building to happen. Gee, what a surprise.
I suspect next Christmas when vacancy rates will supposedly plunge to zero there will still be plenty of vacant flats around Sydney, particularly in the bleak, windswept precincts of Alexandria, Zetland, Moore Park, Wolli Creek etc.
Scott

Ditto.

Peter 147

 

[gniks]

Hey Depreciator

I just checked yesterday with my PM and they had only 2 apartments in our dev (Wolli Creek - Sorrento) last week available for rent and they had 8 apps on the Sat they were advertised so they went that day.

I achieved a $10 pw rise at renewal in July, and the apartment has not been vacant since it was finished at the start of 2003.

I'm trying to find the supply figures and absorption rate for the new adjoining devs which are completed and being advertised, in order to monitor the amount of competition left.

The values have remained stagnant but the income has been constant and rising.

Cheers

 

[depreciator]

The lower rise buildings in Wolli Creek fare better. The larger ones completed a couple of years ago still have what I presume is developer held stock that hasn't sold. There is a new 10 storey block going up on the highway and others on the drawing boards. They are taking the views from the earlier built blocks. Not sure how the promised retail precinct is going - I suspect it's still little more than a 7-11 and a dry cleaner. And I still wouldn't be game to dip my toe in that creek. But if your investment is going well, that's great.
Scott

 

[grossreal]

re think

hi depreciator and gniks
wolli creek what do you think the pricing and sales in lusty street are like at the moment.
sorrento is at the back of this project and the sales at the moment are slow but I see it as a hump in the road I get very conflicting views of this area.
interested in your feedback.
This is a 13 storey building twin tower 93 units