Sydney suburbs which recorded rent price drops, as 'real test' looms

Sydney's rental market presents a complex picture, with some suburbs experiencing dramatic rent hikes while others see prices fall, according to a new report.

Domain's latest quarterly rent report reveals that Sydney house rents jumped 6.3%, or $50, to a record $850 per week, marking the largest quarterly increase since 2022. Unit rents also climbed, rising an average of 4%, or $30, to a record $780 weekly, the biggest quarterly jump in three years.

Specific suburbs saw substantial increases, with Abbotsford's median weekly asking rent for houses soaring by 41.3%. Concord West, Enmore, and Millers Point also recorded significant annual rises in unit rents. However, the report highlights a curious trend of falling rents in other areas.

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Multiple things have happened this year which has really created the foundations, meaning that landlords are pushing through rent hikes.

Artarmon experienced the most significant decline, with median weekly asking rents for houses dropping by 13%. Dundas and Kenthurst also saw double-digit decreases. Unit rents saw smaller drops, with Northbridge and Pagewood recording the largest declines.

Chief residential economist Nicola Powell attributed the sharp increases in some areas to factors beyond seasonality, including landlord-driven rent hikes influenced by potential changes to negative gearing and capital gains tax discounts. She noted that even with grandfathering provisions, behavioral changes are expected to push rents higher. Powell suggested that the high demand and limited supply in small, popular suburbs like Abbotsford, coupled with owner-occupier ratios, likely contributed to their rising rents.

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Even when we remember that there would be grandfathering to the taxation changes, I think ultimately there will be a bit of behavioural change regardless. And what that means is rents are going to go higher.