Sydney’s property market has a large vacancy issue, and it’s one that could mean bad news for property investors who don't do their homework, according to a property expert.
The greater Sydney region saw the new year start with 25,000 empty dwellings in the area, which according to Simon Pressley, head of research at Propertyology, is the latest in a series of trends starting since 2017 that saw the capital city recording all-time high vacancies, with its vacancy rate currently sitting at 3.2 per cent.
Some sub-regions with high vacancy rates include the Hills District, recording the highest vacancy rate for sub-regions at 5.8 per cent, followed by the Upper North Shore at 4.8 per cent, the Lower North Shore at 3.9 per cent, Parramatta at 3.7 per cent, Western Sydney at 3.6 per cent and the Sydney CBD at 3.5 per cent.
At a suburb level, the areas with high vacancy rates include North Sydney at 5.3 per cent, Chatswood at 5.1 per cent, Camden at 4.9 per cent, and Botany Bay both at 4.6 per cent, Liverpool at 4.2 per cent, Ryde at 4.1 per cent and Blacktown at 4 per cent.
Also notable was the greater Sydney region’s declining weekly rents, with CoreLogic recording rent declines in Sydney by 2.9 per cent for the last 12 months.
The reason for this, Mr Pressley said, was due to a few years of record high new supply with a high proportion of this supply added to Sydney’s rental pool.
“Sydney has falling rents, surplus housing stock, and a pipeline with plenty more new stock to come,” Mr Pressley said.
“I wouldn’t at all be surprised if there were 30,000 vacant dwellings across Greater-Sydney by year’s end. That would equate to enough shelter to house a city the size of Coffs Harbour, Australia’s thirtieth largest city.”
By the end of the year, Mr Pressley predicted the vacancy rate will likely increase to past 4 per cent for the whole greater Sydney area.
When looking further afield however past greater Sydney and out to regional NSW, there is less new stock in the market, with rents likely to rise and vacancy rates to tighten.
“The tightening supply of rental stock and local economies that are significantly stronger than many capital city folk appreciate is why property markets in many non-capital city locations have outperformed bigger profile cities over recent years,” Mr Pressley explained.
“It’s a completely different story.”
Tight rental markets according to Mr Pressley include Coffs Harbour, which had one of the lowest vacancy rates in the country at 0.9 of a percentage point, followed by Orange at 1.3 per cent, Dubbo and Gosford both at 1.4 per cent, Albury and Armidale both at 1.6 per cent, Tamworth and Port Macquarie both at 1.8 per cent, Wagga Wagga at 2.5 per cent and Wollongong at 2.6 per cent.