Sydney in world's top 10 most expensive rental cities: report

Sydney is the 10th most expensive city in the world to be a tenant, a new global report has found.

The top three most expensive cities to rent across the world are in the US – San Francisco, New York and Boston – closely followed by Hong Kong, the 2017 Rental Index, produced by British-based online realtor Nested, found.

The survey compared the cost of renting across 120 cities and recorded Sydney as the 10th most expensive on the list, with the cost to rent a square metre at $2.93. For a family looking to rent a suitable home, they would need an income of $96,572.28 a year, or $50,896.14 if they were single.

The income requirements were estimated by looking at the recommended size of a dwelling for households of different sizes from urban planning authorities, and the income required to cover the rent and living costs of those tenants.

But tenants may not be getting that much bang for their buck in Sydney, UNSW professor of housing research and policy Hal Pawson said. Analysis of census data found standard rental housing is now increasingly found further away from desirable inner-areas.

“A growing proportion of those reliant on the private rental market therefore have no choice but to reside in areas less accessible to the amenities and employment opportunities of the central city,” Mr Pawson said.

He said the quality of these properties was also more likely to be substandard.

This comes just days after Choice revealed the results of Australia’s first national tenant survey, which found the majority of people had little security of tenure, dealt with poorly maintained homes and feared eviction.

The costs of housing also had tenants who would normally be able to afford to buy opting to “rent down” instead, taking up properties that would have otherwise been available for those on lower incomes, Council to Homeless Persons acting chief executive Kate Colvin said.

“This creates a domino effect, with those on the lowest of incomes pushed out of private rental into rooming houses and caravan parks, or worse, onto the street,” Ms Colvin said.

“The most useful action the federal government could take is to directly invest in public and community housing, so people on low incomes can get into a home they can afford. Reducing the $11 billion annually spent on tax breaks for investors and property speculators would also help,” she said.

Curtin University associate professor Steven Rowley said those on lower incomes have a “severe lack of choice” in the rental market and face competition from higher income tenants looking for low rents so they can save for a deposit to buy.

“In times of low vacancy rates the situation gets worse as landlords hold all the cards with many choosing to adopt a policy of rent maximisation, reducing security for tenants and making things even more difficult for those on low incomes who are subsequently forced to poorer quality locations,” Mr Rowley said.

“Markets with higher rental vacancy rates such as Perth, where it is over 6.5 per cent, have to work much harder and compete on quality as well as location.”

Melbourne was the 21st most expensive city on the list, Brisbane was 29th and Perth was 32nd.

These results also aligned with the latest Rental Affordability Index by National Shelter, Community Sector Banking and SGS Economics & Planning, which found many parts of Sydney were “extremely unaffordable” and pushing people into homelessness as the situation worsened.

Domain’s Rent Report for December 2016 found median house rents up 1.9 per cent over the quarter to $540 a week. For apartments, rents fell 1 per cent to $520 a week.

On the Nested report, Cairo was found to be the cheapest city to rent property, costing 28¢ a square foot.

The 10 most expensive rental cities in the world

1 San Francisco, US – $4.95 per square metre

2 New York City, US – $4.75 per square metre

3 Boston, US – $4.10 per square metre

4 Hong Kong, Hong Kong – $3.83 per square metre

5 Dubai, UAE – $3.53 per square metre

6 Singapore, Singapore – $3.34 per square metre

7 Washington D.C., US – $3.33 per square metre

8 Geneva, Switzerland – $3.09 per square metre

9 Seattle, US – $3.07 per square metre

10 Sydney, Australia – $2.93 per square metre