Oversupply of apartments pushes Sydney vacancy rate to record high

In a rental market, the balance of power typically tips towards the tenant when vacancy rates exceed 2.5% – as such, Sydney is currently a renters’ paradise.

Throughout January, Sydney observed a 3.7% vacancy rate, up from the 2.3% a year ago – far exceeding the 2.5% tipping point, with almost 1 in every 25 apartments going uninhabited.

News.com.au attribute this oversupply to a surge in housing stock throughout the middle ring suburbs of Sydney.

Inner ring suburbs saw a 3.2% vacancy rate, up from 1.8% a year ago, middle Sydney observing 4.2%, up from 2.5%, and outer regions also saw an increase, with a 3.5% rate.

“All the developments that Sydney has seen in recent years are all finishing at the same time, especially in the west and north west of Sydney, and this is leading to a lot of vacant stock,” said president of REINSW, Leanne Pilkington, speaking to news.com.au.

“It will sort itself out over time, but it is a question of how long,” Ms Pilkington said, estimating these rates would remain high for 12 to 18 months, if not longer.

This lengthy time-scale is excellent for tenants, who can expect rent in these areas to be low and to continue to drop over the next year and beyond.

The flip-side of this advantage is the disadvantage of landlords – those who have invested in a rental property expecting a certain return will find diminished returns during this vacancy peak.

The potential for the balance of investors’ financial affairs to be heavily disrupted, potentially upended, is a sobering side-effect of this surplus of tenant opportunity.

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