Vacancy rates are expected to tighten further in inner Sydney and university towns across NSW following the abolition of the stamp duty concessions for first home buyers looking to purchase existing dwellings, the head of a major real estate group has claimed.
“Across NSW, average rental vacancies are close to 1.5 per cent, which will be exacerbated by the state government’s decision to scratch stamp duty exemptions, aimed originally at helping people off the rental treadmill,” says Angus Raine, CEO of Raine & Horne.
He said the traditional race for student accommodation in late January and February would place even more pressure on vacancy rates.
Under new rules for property exchanged in NSW as of 1 January 2012, first home buyer stamp duty exemptions will only apply to newly built homes, homes bought off the plan and vacant lots. Existing dwellings will receive no exemption under the new scheme.
In Kensington, which is home to the University of NSW, John Paras, co-principal of Raine & Horne Kensington, said the end of the first home buyer exemptions is expected to create a log jam for an already manic eastern suburbs rental market.
“As a consequence, we expect to see prospective tenants offering to pay $20 - $30 more to secure two bedroom apartments, which currently attract weekly rents in the early to mid $500s,” he said.
Matt Clifton, co-principal of Raine & Horne Bathurst, 200km west of Sydney, said the local rental market – which includes students attending Charles Sturt University and the Western Institute of TAFE, which represents around 30-40 per cent of the local rental market - would also be squeezed.
“The rental market has eased, which is typical for early December with vacancy rates hovering around 2.5 per cent,” said Mr Clifton. “However the residential tenancy market will tighten rapidly in January as students return, with three to four bedroom homes, which rent from $320 a week, a popular pick for Bathurst tenants.
“Throw in disenchanted first home buyers, and now is definitely the time to grab a suitable rental home before the New Year rush.”
In Newcastle, Jason Maxwell, principal of Raine & Horne Newcastle, said he expects the termination of stamp duty exemptions will prompt more individuals to reconsider their home ownership plans.
“To buy a $300,000 established home from the start of next year will mean finding an additional $9,000, which could take many workers considerable months if not years to save,” Mr Maxwell said.
“As a result the natural migration from the rental treadmill to home ownership will be stretched out for many aspiring home owners, while also placing additional pressure on Newcastle’s rental market.
“I expect to see rental vacancy rates squeezed tightly in popular rental suburbs around the University of Newcastle such as Jesmond, Wallsend and Hamilton North as we experience the double whammy of returning university students and the end of the first home buyer exemptions,” added Mr Maxwell.
“We also find that some students prefer to live closer to the beaches and therefore grab cheaper apartments in the CBD, so I would encourage anyone considering a Newcastle rental home to make the move now, as it could be a bloodbath in January.”