Inner city suburbs in Australia’s eastern states continue to attract high levels of rental demand, with rents for new tenants in one Sydney suburb surging 12 per cent over the past year, a property management company reported.
RUN Property, which manages 18,000 properties throughout Melbourne, Sydney and Brisbane, said its most recent Quarterly Rent Report showed some new tenants are paying around $60 a week more than they would have a year ago.
Sydney's Neutral Bay was the strongest performing suburb in Australia, where rents for new tenancies jumped by more than 12 per cent in the June quarter compared with the same time last year.
“In North Melbourne, a one-bedroom apartment advertised at $350 a week, up $30 a week from the previous tenancy, attracted 25 groups to an inspection with several applying to rent it,” said RUN Property CEO Rob Farmer. “In Sydney's CBD and Darlinghurst, properties under $600 a week were renting like hot cakes.”
The inner Sydney suburbs of Glebe, Kogarah, Randwick and Potts Point all posted rent rises of at least 11 per cent, while the city's average rent increase when new tenants moved in was 7.8 per cent. The average weekly rent in Sydney is now $534.
In Melbourne, Armadale, Glen Iris and Kew were the best performers, with rent increases of at least 10 per cent, followed by Fitzroy, Essendon, Fairfield, Brunswick and Moonee Ponds which all recorded rent rises of 9 per cent or more. Melbourne's average rent increase for new tenancies over the past year was 6.3 per cent, up to $378 a week.
In Brisbane, Nundah recorded the greatest rent increase, of 5.9 per cent, followed closely by Clayfield, St Lucia and Logan Central, which all had increases of at least 5 per cent. Brisbane's average rent increase was 3.1 per cent to $333 a week.
The company said its figures only show new tenancies, and do not include existing leases that have been renewed with the same tenants.
Mr Farmer said rising rents would see more investors enter the market, particularly during the property market's quieter winter months.
"Rental growth has been strong and consistent over the past 18 months, so it surprises me that more investors are not taking advantage of the dip in sales activity to secure their next bargain investment."