Inner Sydney rental vacancies stabilise as exodus from middle ring continues

“As we reached the end of a chaotic year for the inner city and regional rental markets, the vacancy rates continued to stabilise,” said REINSW CEO Tim McKibbin.

“Though, with this latest COVID-19 wave now hanging over NSW, it will be interesting to see how the market fares during the first quarter of the year,” Mr McKibbin noted.

REINSW’s data revealed a jump in vacancies in the middle ring, from 4.4 per cent to 4.7 per cent. Sydney’s outer ring remained stable with no change at a tight 1.8 per cent vacancy rate.

“The job market continued to strengthen during December, but as we begin 2021, many tenants may still be faced with tough financial decisions to make due to the drop in government assistance payments on 1 January.

“At the end of last year, we saw a slowing of the exodus to regional areas, with vacancy rates increasing in many regional areas. Wollongong’s vacancy rates increased from 1.8 per cent to 2.5 per cent, which affected the Illawarra’s result by an increase of 0.2 per cent to 1.5 per cent.

“Conversely, Newcastle saw a large decrease in vacancies dropping from 2.6 per cent in November down to 1.5 per cent, which saw the Hunter region with a drop in rates overall,” Mr McKibbin said.

Looking ahead, Mr McKibbin predicted 2021 would be a “mixed bag”, with Sydney’s inner ring set to settle down while the exodus from the middle ring continues. This, he noted, may see tenants either returning to more popular city areas or abandoning the city altogether for a sea change to regional NSW or elsewhere in Australia.

“With what we hope to be a short-lived new COVID wave, it will be a little more time before we see the market continue with the stability it was starting to find in the latter part of 2020.

“The holiday season has been chaotic for some with the introduction of new COVID-related legislation, so we expect to see more fluctuations in the market over the next few weeks.”