As house and unit prices continue to experience strong capital growth more and more people are choosing, or are forced, to rent. This is obviously having a large effect on the local rental market. In the past the percentage of homes occupied by tenants has been relatively steady. For both the 2001 and 2006 census 27% of private dwellings were rented. In the last census (2011) this figure rose to 29%. While this 2% increase may appear small, when applied to the nation’s 9 million private dwellings this is roughly 180,000 homes!

In Sydney the trend is even more apparent with 31% of our population renting their home. This rental demand can be seen as being a direct driver for some of the significant growth in rental yields throughout the city. Sydney has recorded rental growth of 4.3% in the last 12 months. In addition to rising rents Sydney has also experienced a falling vacancy rates in recent times. In September 2012 the rental vacancy rate was 2.7%. For September this year the vacancy rate was just 1.6%.

With greater tenant demand and current rental income growth it is unsurprising that more and more investors are being drawn back to the market. With prices in a strong growth phase across Sydney we are seeing some enthusiastic buyers prepared to pay too much for an asset. We urge anyone looking at entering he current Sydney market to conduct thorough research and be in touch with the team at IPS if need be.

Next month we will bring you some tips for buying in a heated market.


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