From our correspondent in Sydney,
We are in Tamarama, a wonderful area of Sydney that borders the beach. But for the residents of a block in the neighborhood, the dream is almost over. Recently the landlord told them he wanted to increase rents by 70%.
Harrison, one of the tenants, went to challenge it to a broker, and got it reduced to 22%. Definitely a victory, but it has a bitter aftertaste. ” I feel like I hit a beat, but it’s true that 22.5% is still a massive increase, taken out of context… “, notice.
Cost inflation and Covid related measures
If rents are rising a lot in Sydney, it is primarily due to inflation, offset in Australia by large interest rate increases by the central bank. It has a direct impact on the mortgages, which landlords pass on to tenants.
Another factor at play is the post-Covid catch-up phenomenon, explained by Jim Gilmovich. President of the New South Wales Homeowners Association. ” During Covid, with lockdowns and near zero immigration, landlords have had to cut rents as demand collapses Jim Gilmovich explains. « Now that companies are asking their employees to return to work and immigration has returned to normal levels, this explains the very rapid recovery in housing demand.. »
Finally, there is a significant housing shortage in Sydney, with a vacancy rate of less than 1%. A point on which the government is committed to acting. He recently announced the construction of 30,000 social housing units over the next five years.
For Jim Gilmovich, this is deeply insufficient. ” This is a very weak goal. 30,000 homes would have to be built annually to meet demand Harrison’s neighbour, Sophia Morris, laments that the announced measures do not respond to the current crisis. The plans announced at the moment do not provide for a rent freeze, nor to enhance the protection of tenants from annual rent increases. Every tenant in Sydney can expect rent increases, but there is currently no set limit on the amount of the increase. »
And the situation can continue. Experts predict that rents in Sydney, and all major Australian cities, will continue to rise rapidly for at least the next five years.