Sydney's rental market remains exceptionally tight. As the weather has improved, we've seen a modest increase in tenants moving around, but certainly no major shift. The weaker economic backdrop appears to be encouraging many tenants to simply stay put for longer.
Our internal vacancy rate continues to hover around just 0.5%, while the broader Sydney vacancy rate remains around 1.5%. New properties are typically leasing within 10 days, premium rents are being secured and, importantly, the calibre of applicants remains very high. Landlords will commonly have two or three strong applications to choose from.
We're also seeing modest rental growth. The biggest adjustments are occurring when long-term tenants of three years or more vacate. In some cases, rents have reset 20-30% higher when brought back to current market levels.
The Federal Budget changes to negative gearing and capital gains tax are also beginning to influence investor behaviour. We're already seeing very few new investors entering our established-property markets. Some existing investors are choosing to sell, although in the current subdued sales market this remains a trickle rather than a flood.
At the same time, we're seeing another trend emerge: homeowners retaining their existing property as an investment when they move, rather than selling it. Whether driven by finances or lifestyle, it's helping retain some rental stock.
Looking towards summer, the fundamentals remain clear: vacancy is extremely low, rents are edging higher and tenant quality remains strong. If investor participation continues to weaken and rental supply contracts further, that will place additional pressure on rents over time.
As always, if you'd like to discuss your investment property, rental return or future strategy, we're here to help.
