Sydney has become a landlords’ market and desperate renters are paying the price

Long searches, skyrocketing prices, and diminishing quality. Sydney has become a landlord’s market, and desperate renters are paying the price. 

Advertised bedrooms that are no bigger than closets. A stair railing hanging loose from the wall. Bathrooms that don’t have a door. Mould — and a lot of it. None of these details mentioned on a recent rental listing asking for upwards of $1,000 in rent a week.

For people who haven’t been on a rental hunt in a while, this might sound like a horror story. But for those looking for a somewhat affordable home in Sydney’s inner-city suburbs, it’s a Saturday morning bingo card.

Here’s how it often plays out.

Before you’re even through the door, you’ll be standing alongside up to 30 other hopefuls. You’ll then be shuttled through the property, back to back, elbow to elbow, in an allotted 15 minutes.

In the end, you find out at least three other groups have already offered above the asking price.

And then, with fingers crossed, it’s straight on to the next inspection.

Rental vacancy rates across Greater Sydney dropped to 1.4 per cent in April, according to Domain, with the number of vacant rentals halved in the three months between December and March. Meanwhile, the median weekly asking price for a rental house is at a record high.

In other words, Sydney is currently what you call a “landlords’ market”.

Across the country, most states are seeing similar surges. According to Domain’s latest rental report, the median price for house in Australian capital cities rose to $508 in the first three months of the year — the highest it’s ever been.

It’s a far cry from the height of the pandemic, when the lack of international migration drove down rental prices and drastically increased vacancy rates. Across Greater Sydney, the vacancy rate peaked at 3.8 in April 2020, with similar highs recorded later in the pandemic.

The impact of the current boom is palpable at rental inspections, as prospective tenants share stories of long searches, budgets above what they can afford to pay, and disappointment at the quality of what’s available in their price range.

And the crisis is not confined to the inner city. Mary Thoms has been looking for a property for herself and two young grandchildren in the Liverpool area since Christmas last year. At this point, she says she’ll take whatever she can get.

“Waking up early in the morning, the first thing is that thought: get a house, a place, so you can have a roof over your head.”

“Every Friday I’m looking at Domain to see if there are any good houses or even units, that are three-bedroom and spacious.”

“But at the inspections, there’s a lot of people, so you get rejected. It’s heartache, I’m just tired of looking.”

We speak to Mary outside an inspection for a four-bedroom townhouse in Casula in Sydney’s west. At $580 a week, it’s above the median price for the suburb — but well below the cost in suburbs closer to the CBD. The grandmother is currently living in a unit in Blacktown, which has been plagued with break-ins and maintenance issues that have not been fixed.

Even though the price is above what she would like to pay, Mary says she’s going to apply for the property. But she’s not feeling optimistic. “They’re all going to apply,” she says, referring to the handful of other groups there for the inspection. “So we’re going to apply, too.”

The outward push

The real estate agent also expects the property to go quickly; it’s a modern family home with a yard, located right near Casula Public School.

It’s exactly the type of property currently in short supply and high demand in south-west Sydney, according to Michael Busdon, the property manager at Raine and Horne Liverpool.

“During the pandemic, house rentals increased and apartment rentals dropped, and we had to offer people rent reductions in order for them not to vacate their apartments,” he says.

“It seems that house rental hopes have bolted a little, and now apartments are having their turn.”

In a “normal market”, he says, you would usually expect between five and eight people at a house inspection in his area. Now when a house is on the market, assuming it’s in good condition and well-located, it’s in excess of 16.

To explain this you only need to look at the real estate’s print-out of available properties; during the pandemic, it was four to five double-sided pages long — now it’s down to one page, front and back.

“I have seen it worse than this,” he says, referring to the early 2000s, when people would submit their application forms with cash attached “as a bribe”. Thankfully, he hasn’t seen that happen this time around, but adds: “This could be just the beginning”.

Unlike those queuing up for inspections, Michael doesn’t see the booming rental market as an entirely bad thing. “It depends what side of the fence you are on,” he says, “if you’re a tenant, you’re probably not liking what is happening, if you’re a landlord, you’re probably feeling a little bit relieved.”

That’s because for the first time in years, as migrants return to Sydney after border closures and renters get back to business as usual, landlords are in a position to increase rents — just as the reserve bank lifts interest rates for the first time in 11 years, adding to the monthly cost of mortgages.

While there are major differences between the city rental market compared to the outer suburbs — the median rental price for a house in Blacktown in Sydney’s west is exactly half that of the inner-city suburb of Surry Hills — Michael sees it as more of a continuum: when vacancy rates drop in the city centre, people start to nudge outwards out of desperation, eventually driving up prices and demand elsewhere.

“Gentrification happens in the rental market too,” he says.

Playing the guessing game

Even with the push outwards, many are still scrambling to be close to the city whether it be for work, lifestyle, or convenience. Especially as prices increase across the board.

“I’m in the Campbelltown area which is just as expensive as the inner west,” says 20-year-old Laila Sumner. “I’m in a one-bedroom that doesn’t even have a proper bathroom, just a toilet and a shower, and I still pay $300 a week.”

Laila is hoping to move to the inner west with her partner to be closer to her job in the city, but outside an inspection for a two-bedroom apartment in a nondescript, red-brick building in Marrickville, the pair aren’t optimistic about their options.

“The first place we looked at was a bit of a slum, it smelt of mould,” Shay Wilson, 22, says. “It was a terrace house that had been broken up into four separate apartments. I was like, ‘ah, maybe not’. Everyone walked in and then straight back out.”

As for the Marrickville apartment, advertised for $430 a week, the review wasn’t much better. While it fell within their $400 to $500 a week budget, it was old and severely lacking in built-in storage.

“It’s almost like a guessing game,” Laila says.

“Nothing seems like it’s priced fairly at all — it’s kind of like ‘Oh I think people will pay this for that house, let’s just put it at that’.”

At the same inspection is 25-year-old Madison McGrail who has good reason to be looking for a new place: she’s just broken up with her partner who she lives with in Redfern.

But timing is not on her side; since her most recent move in June last year, she says there are fewer available options and the ones that tend to be lower quality — even with a bigger budget of $550 a week. “It’s just yucky apartments out here,” she says. Of the six places she’d inspected so far, she hadn’t applied for any.

“The level of quality that people think they can show houses in [isn’t acceptable],” she says. “I was at one the other day, and I was like ‘is this place going to get cleaned again before we move in?’.”

Eirene Tsolidis-Noyce is the general secretary of the newly-formed Renters and Housing Union (RAHU). The organisation was formed in response to the COVID pandemic, in an urgent bid to ensure renters who lost work as a result of lockdowns were able to remain in their homes.

But as the pandemic has progressed, and lockdowns have eased, their attention has turned to issues within the home. “We have black mould, seriously urgent repairs, hot water that’s not running, electricity that’s gone wrong,” she says.

“The broader trend is that the properties we are living in are not kept to a minimum standard and the responses we receive from agents on our own, as tenants, are not adequate.”