One-bedroom apartments no longer property investment Cinderellas as rental growth spikes in NSW: PRDnationwide

Rental increases on one-bedroom Sydney apartments – long considered the Cinderella of property investment – are now often exceeding rental growth increases on two-bedroom units.

And the one-bedroom units are no  longer confined to Sydney’s inner-city suburbs, with new developments in middle-ring council areas like Canterbury and Rockdale highlighting the trend, according to PRDnationwide research analyst Oded Reuveni-Etzioni.

Investors with one bedders are yielding strong gains in the median rental price, the study found.

Canterbury Council median one-bedroom rent increases have averaged 11.8% per annum over the five years to December 2011, according to PRDnationwide research analysis of government rental data across Sydney, the Hunter and Illawarra regions.

Strong gains in the median rent price of one-bedroom units were also recorded in the Rockdale municipality, along with the local government areas of Parramatta, Ashfield and Ryde.

The one-bedroom rental increases in Canterbury, Rockdale, Parramatta, Ashfield and Ryde easily exceeded the rental growth achieved with two-bedroom units over the past five years.

Source: PRDnationwide

Campbelltown was the strongest-performing local government area for two-bedroom units, with the median rent for a two-bedroom unit increasing by 12.6% per annum since December 2006.

Source: PRDnationwide

Fairfield, Liverpool and Canterbury also yielded strong rental rises during the period.

The City of Sydney recorded the highest rent price for both one- and two-bedroom units, with a median rent of $500 and $670 per week respectively.

Sydney City represented the largest unit rental market in NSW, with 30,139 government rental bonds held as of December 2011.

Sydney was closely followed by the Waverley local government area, with a weekly rent of $488 (one-bedroom unit) and $630 (two-bedroom unit).

Other municipalities to appear in top 10 highest rent price lists were Woollahra, Canada Bay and North Sydney, which represents the third largest unit rental market in the state, with 11,359 government-held bonds.

Maitland was the strongest performer outside of Sydney with 10% annual increases over the past five years for its two bedroom units.

PRD suggests the growth stemmed from large infrastructure projects that drew a transient population of construction workers, and from mining employees relocating to the Hunter and choosing to rent in the short term.

The highest regional rent price was paid in the Newcastle district, where a two-bedroom apartment recorded a median rent of $320 per week.

The City of Wollongong made up the largest rental market outside the metropolitan area, with 7,244 bonds held at December 2011.

“Savvy investors are attuned to the changing preferences of renters and recognise the growing rental markets in the middle and outer suburbs of the metropolitan area,” Reuveni-Etzioni says.

“Investment opportunities also exist in areas outside the metropolitan area, where strong demand and limited supply of units maintains the pressure on rent prices.”

Images courtesy of Flickr.

Apartment photo by Allshots Imaging.