A shocking new photo has revealed the hidden flaw in Sydney’s merciless rental market, as renters across the city struggle to put a roof over their family’s heads.
In the photo, which was shared to the AusFinance Reddit page this week, dozens of hopeful renters can be seen lining up in a building lobby to inspect a “tiny, tiny” one-bedroom, inner-city apartment advertised at $525 per week.
The building lift had “already made a few trips up”, with another “30 more people upstairs”, the user who shared the image said.
“I guess this was undervalued by about $75-100,” they mused.
It reveals a dismal truth for the modern Sydney renter. Staggeringly high prices have led to fierce demand for any property advertised at a reasonable rate – with no guarantee that would even be the price for which the unit was rented out.
NSW vacancy rates have fallen to levels not seen since 2003, while prices have increased by 3.2 per cent, according to recent data from PropTrack. Tenants are caught in the middle, squeezed by both soaring prices and short supply.
Annual data from the Rental Affordability Index (RAI), meanwhile, revealed that every capital city had experienced a decline in rental affordability, with low-income renters such as single parents, pensioners and job seekers among the most vulnerable.
A staggering 30 per cent or more of a person’s income was typically spent on rent, the RAI found.
Redditors were quick to lament the situation.
“Why would you even bother joining a queue that long?” one queried.
“I’ve been to worse nightclubs,” another joked.
And another: “Renters are second class citizens in this country. Good luck.”
Landlords, Airbnb hiking prices
The lobby in the photo is reportedly that of The Quay building in Haymarket in Sydney’s inner-city, a 270-unit-strong high-rise spread across two towers, complete with an indoor spa and gym.
The high-end complex is topped off with 6000 square metres of retail space, plus a four-level basement carpark.
One user said they were a former resident of The Quay, moving out when their landlord decided to raise the rent by a whopping 60 per cent in June with just two months’ notice.
They were “great apartments”, the user said, but “paying $550 a week for a small study room wasn’t too appealing”.
Some landlords used the viral photo as a sounding board to highlight their own foray into the market.
The one-bedder up for rent was “certainly below market value”, one landlord user mused, adding that they rented out a one-bedroom in the CBD for a whopping $720 per week.
It took them a mere two days to get a tenant back in October, they said.
Some Redditors pointed fingers at vacation rental site Airbnb for stealing supply from the already tight market.
There are 21,000 unique properties in Sydney currently advertised on Airbnb, 12,000 of which are available to rent for 30 days or more. One sleuth estimated they earned on average $270 per night – a considerable incentive for landlords, even on the assumption that they abide by the 180-day legal renting limit for vacation homes.
Secret rent bidding continues despite new laws
The NSW government made rent bidding illegal earlier this month in an attempt to improve affordability and alleviate soaring cost of living, as many landlords pass interest rate hikes onto their tenants.
“It’s time to put an end to this practice and give more people security and certainty so they can plan for their future,” NSW Premier Dominic Perrottet said at the time.
“An advertised rental fee should be just that and we will take action to ensure rental bidding is outlawed.”
The ban, however, only impacts solicited rent bidding, which is when a landlord or agent encourages prospective tenant to up their rent offers and get ahead of competition.
Unsolicited rent bidding, in which tenants offer more rent without explicitly being asked, is still perfectly legal.
An even tougher road ahead
Figures released by SQM Research revealed just 1.4 per cent of all Sydney rental accommodation was available for lease at the end of November – about half the supply of rentals available at the same time last year.
Last year there was just shy of 20,000 rentals up for lease but the supply has shrunk to just 10,000 properties.
The shortage has put the squeeze on renter budgets, with the average price of rental accommodation surging nearly 29 per cent annually, SQM Research revealed.
“The rental market … remains very much in favour of landlords,” SQM Research director Louis Christopher said. “The immediate outlook is ongoing extreme tightness in the rental market.”
“Given the already low rental stock on the market, early 2023 could be a nightmare for would be tenants,” he added.
Ellen Witte, lead author of the RAI report, said the situation was extremely taxing for those on single income budgets.
“The situation is particularly bleak because in the past low income households if needed to could still move to the regions, but often far away from jobs so it’s not really a solution,” she told NCA NewsWire.
“Vacancy rates for rental housing have dropped so sharply everywhere and is a key indicator for where prices go if they can see rates are low, they’re generally below 1 per cent.”
Queensland’s solution to the rental squeeze
Meanwhile, the Queensland government recently committed to a pricey sustainable housing strategy.
Premier Annastacia Palaszczuk announced in October her government would double the size of its Housing Investment Fund by injecting $130 million each year into the state’s housing sector.
The government pledged to inject an additional $56m to the nearly $4bn social and affordable housing funding, with $11.7m to help about 2500 Queensland stay in their leases to avoid homelessness, $10m for targeted loans and grants and $10m to set up extra temporary emergency accommodation with on-site support.