Caution following REI's lead over rent drop

Breathless good news on rental affordability from Tele land this week.

Citing Real Estate Institute of NSW data, the state's favourite tabloid told us that rent in some of Sydney’s blue chip neighbourhoods – including Bondi Junction, Neutral Bay, and Manly – is down by between $25 and $70 per week.

REI president Malcolm Gunning attributed this fall to a ‘glut’ of new apartments released onto the market in 2014. 

A strong second quarter does not a triumph make

But we suggest caution before jumping to any of the same conclusions. Whilst REI data is not freely available to the plebeian blogosphere, it’s worth noting that the basis for the article’s claims appears to be a REI study of the second quarter of 2015 alone. This is a perilously short period of time from which to be drawing any bold conclusions such as these.

What's more, as the second quarter takes place over both a university break and the feared ‘polar vortex’ period, autumn and winter variations for rent in student and waterfront neighbourhoods are also relevant. Indeed, of the ten suburbs cited in the article, six are beachside or waterfront, and two are situated in the immediate vicinity of Sydney University or the University of New South Wales. Bondi Junction arguably fits both criteria.

Remember too that REI data is based on asking rather than actual rents. As we noted recently, this paints a misleading picture of the market. Far more reliable is the equivalent data in the Rent and Sales Report – based on the rent paid in new tenancies, as discerned from rental bonds lodged with Fair Trading (i.e. almost all of them). And published free of the desire to push any particular narrative. 

That, too, is a quarterly publication, with the second quarter edition due in a tantalising 21 days. We will wait on its findings before making any breathless conclusions of our own.