Sydney’s Mortgage Market Trends: Opportunities For Profit

Sydney’s Mortgage Market Trends: Opportunities For Profit – Sydney’s rental market is in crisis with extremely low vacancy rates, high rental prices, strong demand and a growing population, creating a pressure cooker-like environment.

And new figures highlight the dire state of Sydney’s rental market has created a bleak picture for renters.

Sydney’s Mortgage Market Trends: Opportunities For Profit

Here’s a list of all the current trends in the Sydney rental market, and what we can expect to see next.

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The rental market has experienced significant changes in recent years, but Sydney renters are now facing a storm of trends that are creating significant market disruptions.

State-wide extremely low vacancy rates and fierce competition are pushing the NSW rental market into crisis mode.

And despite the increase, the rate is still very low and behind the 4+% recorded in the mid-2020s.

As of June, there were just 12,143 properties available for rent across the city, in line with Sydney’s 1.8% vacancy rate recorded in June last year.

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The rental vacancy rate in Sydney’s CBD rose sharply to 5.7% in June, likely reflecting a sharp increase in demand from international students.

North Coast NSW was steady after a recent increase of 1.8%, and the Blue Mountains was steady at 1.7%.

In short, this is because demand is at an all-time high and any available property is being snapped up by tenants.

This has increased competition for available housing, driven up rents and made it harder for many Australians to afford a place to live.

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One aspect of the boom in the housing market during the pandemic was that it was driven by owner-occupier buyers.

At the time, many investors took the opportunity to sell properties, partly because of uncertainty about rental demand, but also because, in many cases, rising house prices led to strong capital gains. Offered an opportunity to sell with

By the end of 2021, 25% of properties sold across the country were previously rented properties and this number will further increase through 2022 and 2023.

You can see from the chart above that before the pandemic, only 15% of sales were investment properties, and that number has been stable for some time.

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It may be understandable that investors would want to get in on the act of raising prices, but I see this as a short-sighted move, and one that has exacerbated today’s rental crisis.

There are also many owner occupiers who sell when prices are at their peak and move into rental accommodation in search of their next property (or in the hope that prices will fall).

So not only is the number of real estate investments declining rapidly, but the number of renters who have become owner-occupiers is increasing, which is putting pressure on the market.

Of course, the lack of rental property supply is two-sided – on the one hand, many rental properties have been sold to owners, on the other hand a tight pipeline of new projects is nearing completion.

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An oversupply of apartments and other regulatory and non-regulatory factors have resulted in reduced investor demand for Sydney’s “off the plan” apartments.

Due to skyrocketing construction costs and material shortages caused by the pandemic, many projects stalled, failed to get off the ground, and a number of construction companies faced bankruptcy.

According to CoreLogic’s Cordell Construction Cost Index, construction costs are set to increase by 11.9 percent in calendar year 2022 – the largest annual increase on record (excluding the period affected by the GST implementation).

One of the most attractive benefits of being a real estate investor is control – you have complete control over how you use and improve the property.

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While stricter rental laws have reduced investor demand (and therefore the number of rental properties available), I think this is only at the margin.

Not only this, the investment in residential property by foreign buyers has also decreased due to new government rules, regulations and duties imposed on foreign buyers.

Confidence issues have also damaged confidence following the collapse and defection of several high-profile high-rise blocks such as Menara Opal.

Off-the-plan apartments are an investment strategy that I would always tell investors to stay away from, but the problem is that our rental crisis will not improve without new housing.

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With international borders opening in early 2022, Sydney is set to become a major recipient of new residents, skilled migrants and overseas students, adding to the Sydney property market, particularly the rental market. There will be pressure.

Westpac estimates that net immigration will reach a record 400,000 in 2022 and another 350,000+ is expected this year… and a large proportion of these will be in NSW.

According to data from the Australian Bureau of Statistics (ABS), Sydney’s population will grow by 1.7% in calendar 2022.

Figures from the federal government’s Population Center show the state is expected to gain 1 million new citizens over the next decade, mainly from overseas, with the population reaching 9.1 million by 2033.

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Sydney has become a popular destination for people moving to Australia, and this influx of new immigrants has put pressure on the city’s housing market.

As more people move to Sydney, demand for rental properties increases, causing vacancy rates to drop.

The city has a thriving job market, with many opportunities in industries such as finance, technology and tourism.

As more people work, they can buy rental properties, which lowers the vacancy rate.

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During the COVID-19 pandemic, many Sydneysiders were moving north to regional NSW and many to Queensland in search of more affordable lifestyle suburbs and property.

But now that restrictions have eased and the worst of the outbreak has passed, many businesses are calling their employees back to the office… and that means going back to the city.

The vacancy rate for Sydney CBD offices reached just 14.4% at the end of June, meaning the occupancy rate is around 85% of pre-pandemic levels.

Additionally, Sydney Transport data shows that pedestrian traffic at one of the city’s most important train stations (Wynyard) was at its highest level since February 2020, shortly before the pandemic closure. has reached

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Opal data also shows the number of Sydney residents using the transport network has risen to around 80 per cent of pre-pandemic levels.

Sydney residents are increasingly preferring spacious living and separate study areas at home as Covid-19 restrictions increase.

Research by major bank Westpac has found that more Australians are working from home and balancing school and family commitments under one roof, so spacious living is now a priority.

Outdoor spaces, larger kitchens and extra living space are in greater demand now than before the pandemic.

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Because even though restrictions have been eased, people are spending more time at home than before restrictions, which means we want more from our property.

And declining rents, particularly for inner-city apartments, and the decline in attractiveness of shared housing mean especially small rental housing.

Census data shows that the share of single-person households increased significantly from 2016 to mid-2021.

Overall, the average household size fell from 2.59 to 2.55 and while that doesn’t seem like a huge drop, it means there are about 160,000 extra homes across the country.

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According to realestate.com.au data, rental demand in inner and central Sydney has increased significantly, as measured by the number of potential tenants per listing.

Over the past year, the most competitive area for renters has seen demand more than double, as the number of potential tenants on each listing has increased year-on-year.

These are homes in highly competitive areas, such as the Canterbury and Maryland-Guildford suburbs where weekly rents have increased by 50% in the past year.

SQM research shows Sydney has the highest average rental price of the capital’s house and unit market, with $956.47 per week for houses and $663.49 per week for units (July 2023).

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Low supply of new homes combined with extremely low vacancy rates, investor exits from the market, high demand and a growing population have created a perfect storm of factors that have fueled Sydney’s rental market. I have pushed.

Given the significant imbalance between supply and demand, there is unlikely to be much relief for tenants in the short to medium term as stock levels are unlikely to increase significantly in the near future.

Net migration to Sydney is expected to remain strong for some time to come, putting further pressure on rental prices.

It is likely that some tenants are now sacrificing extra rooms or home offices to share the rent burden and rebuilding shared homes that were affected during the COVID-19 pandemic.

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Those with the financial resources to put down a deposit can jump into home ownership sooner rather than later, while others look to longer leases and look for new rentals rather than moving out.

Of course, the government is looking for big companies to enter the ‘build to rent’ segment, but this will take time and only in certain places, while the increase in the number of international students creates more demand. will

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