Sydney life of luxury moves out of reach faster than anywhere else in the world
Sydney tops a list of the world's fastest growing luxury rental property markets, while ordinary renters are also paying more than anywhere else in the country.
Nowhere in the world is the cost of renting a life of luxury rising faster than it is in Sydney.
A snapshot of trends in luxury lettings markets across 15 key world city markets has revealed that in the past 12 months, Sydney’s luxury property rental market has soared more than any other.
Knight Frank’s Prime Global Rental Index (PGRI) Q2 2024 revealed a 13.9 per cent rise in the New South Wales capital over the past 12 months. Its growth rate was almost 3 per cent higher than Tokyo, which saw an 11 per cent rise in luxury rents over the 12 months to the end of the 2024 financial year. Berlin came in third, with annual growth in prime rents of 6.9 per cent.
As exceptionally as Sydney prime property rental market has tracked, the latest result is actually a decline on the manic growth of recent years.
Knight Frank Australia Chief Economist Ben Burston said average annual rental growth across the 15 cities was at 3.5 per cent in the 12 months to the end of June 2024, remaining at the same level seen in the first quarter of the year.
The result halted the ongoing decline in annual rental growth that had been evident since growth spiked in early 2022.
“The Sydney rental market has tightened significantly due to strong immigration over the past two years, which surged after Covid restrictions were eased, and has yet to be significantly offset by the delivery of new supply,” Mr Burston said.
“The pace of growth, however, is now easing, with Sydney’s quarterly growth rate falling from 4.5 per cent in Q1 to 0.9 per cent in Q2, indicating that affordability is becoming a constraint on the rental surge, while the rental market has also benefitted from a rise in listings in recent months.
“While growth has slowed, upward pressure on rents is likely to persist until investor demand for new apartments is strong enough to drive a substantial injection of new supply.”
Since Q1 2021 prime rents in Sydney have risen by 40.9 per cent, sitting behind New York recording the highest growth at 57.1 per cent, followed by London (56.5 per cent), Miami (45.8 per cent) and Singapore (41.4 per cent). These are the only five cities to record growth of more than 40 per cent over this time.
Prime property is the most desirable and expensive property in a given location, generally defined as the top 5 per cent of each market by value.
Rachel Keeley, Senior Portfolio Manager at McGrath, said the demand for luxury rentals in Sydney is steady, driven by a combination of limited supply and a growing appetite for high-end living spaces.
“Properties in prime locations such as Barangaroo and the CBD are particularly sought after.
“We’ve recently seen great success in Barangaroo, a testament to this trend.
“Barangaroo has become a hotspot for luxury rentals, attracting tenants who are looking for top-tier amenities and a vibrant lifestyle.
“The area’s exclusivity and the quality of developments have positioned it as a premium choice for discerning renters.”
Sydney has highest rent prices
Even at prices more attainable for the average renter, Sydney remains the most expensive city in the country in which to rent a house. The median weekly rent is sitting at $750.
Canberra takes second place at $690 per week, followed by Darwin ($660 per week), Perth ($650 per week), and Brisbane ($630 per week). The median weekly rent for a house in regional Australia is $550 per week.
Sydney also remains the most expensive city for renters looking for units, with the median unit price coming in at $720 per week.
The next most expensive capital cities are Brisbane ($600 per week), Canberra ($560 per week), Melbourne ($550 per week), Perth ($550 per week), and Darwin ($530 per week). The median weekly rent for a unit in regional Australia is $480 per week.
According to Mozo’s new 2024 rental report, almost half of Australian renters (49 per cent) spend at least 30 per cent of their income on rent in 2024, placing them in financial stress.
Soaring rents have contributed to Australian cities becoming less attractive destinations in which to live and work, according to annual global liveability rankings.
