Sydney’s luxury residential property market continues to outperform in 2022, with rental prices rising by 6.7% annually, according to Knight Frank research.
The figures placed Sydney sixth out of 10 ranked global cities for luxury residential rental growth.
Prime property has seen strong growth in Sydney, with a 3.7% increase in Q4 of 2022.
Singapore saw the strongest rise in prime rents year-on-year, with growth of 28.2%, followed by New York (18.6%), London (17.8%), Toronto (15%), and Tokyo (8.4%).
Meanwhile, Sydney’s annual growth surpassed Auckland and Geneva (both 3.8%), Monaco (2.7%), and Hong Kong, which saw a fall in luxury residential rents of 6.4%.
Knight Frank’s Head of Residential Research Michelle Ciesielski said that prime rents had remained robust across many global cities and were still averaging double-digit annual growth, despite the overall rate of annual growth starting to slow.
“Sydney saw strong growth over the last quarter of 2022, in line with the rental growth occurring in the wider luxury residential market, and with a shortage of prime homes to rent in the city, prime rental rates are expected to continue strengthening,” she said.
Demand for prime residential rentals in Sydney comes from a mixture of corporate tenants, people looking for somewhere to live while renovating their main residence, and skilled professionals who are either expats returning or migrating from interstate and abroad.
Knight Frank’s Head of Residential Erin van Tuil said that many skilled professionals were taking up promotions to senior management roles from interstate, and international workers were being encouraged to migrate here.
Even with incentives, there were very limited properties to view, so many new workers to the city were taking up weekly rates with city hotels and extensively using holiday home platforms like Stayz and Airbnb while quickly getting acquainted with different pockets of the city.
There were also those still waiting on their house renovations to be completed and have extended their rental requirements after being delayed by severe weather events, delivery of materials, and securing tradespeople.
Van Tuil said that many long-standing corporate rental agreements had been removed from the market throughout the pandemic to save costs, as interstate and international teams couldn’t visit their Sydney office, and when they were added back into the rental pool, there was a short lull in prime rental growth throughout 2021.
“However since borders have reopened, hotels have needed to step in to fill this returning demand as there is simply not enough rental accommodation for new workers moving to the city,” she said.
“As a result, we’ve seen Sydney’s prime residential rents grow 15.8% above their pre-pandemic level.”