Sydney rents dip as vacancy rates rise and affordability pressures mount

Cotality data shows Sydney rents slipped 0.4% in the September quarter, the first drop in nearly two years, while the national rental market grew only 0.5% after a 1.6% rise in June. The median weekly rent reached a record $713, but vacancy rates rose to 2.1% nationwide and 2.5% in Sydney as overseas migration slowed and affordability tightened. Tim Lawless of Cotality said renters are adjusting by forming larger households, staying longer at family homes, or moving to cheaper areas.

Budget reforms targeting negative gearing and capital gains tax were expected to add $2 per one outlet to rents, but the observed decline suggests demand is restructuring. Property groups warned of higher rents from fewer investors, yet economists like Saul Eslake argue that reduced investor purchases also lower rental supply, offsetting any price rise.