April 2023

Real Estate Round Up #57

The Sydney housing market is facing multiple challenges, with an increase in rental prices, chronic supply shortages, and concerns about the broader economic outlook. This report will examine the key issues impacting the housing market in April 2023 and discuss the implications for renters, buyers, and the broader Australian economy.

Rising Rents and the Impact on Tenants

Rental prices in Sydney have been steadily increasing due to a combination of surging immigration and a chronic supply shortage (1)(3). This has resulted in a tight rental market, with many tenants struggling to find affordable housing. A notable example of the current rental market situation is a ‘kitchlet’ in Sydney being offered for $340 per week, demonstrating the high cost of rent in the city (2).

This increase in rental prices has had a significant impact on the wealth gap in the region. A recent report highlighted that over one million people in New South Wales are now living in poverty, with the situation in Sydney worsening (5). This widening gap is concerning for the future of the city and the well-being of its residents.

Concerns about the broader economic outlook have been raised by the International Monetary Fund (IMF), which has warned of a potential downturn in the global economy (6). This downturn could have negative implications for the Australian housing market, further complicating the situation for renters who are already facing high rental costs. In addition, consumer advocacy group CHOICE has called for increased regulation of rent tech data used by property managers to protect renters’ privacy and security (7).

Rental blacklists and tenancy databases are also causing anxiety for renters who may be concerned about their inclusion on such lists and the implications for their future housing prospects (12). These databases can make it more difficult for renters to find housing, further exacerbating the challenges faced in the current rental market.

Housing Market Outlook and Purchase Opportunities

For those looking to buy property in Sydney, the current market conditions may be discouraging. Potential buyers hoping for a downturn in the market to capitalise on lower house prices may be disappointed, with experts warning that waiting for a “fire sale” may not be a wise strategy (4). This advice suggests that those looking to buy should carefully consider their options and be prepared to act quickly if they find a suitable property.

Despite the supply shortage, there are some unique opportunities for buyers in the Sydney housing market. One such opportunity is a home in Greenacre being offered rent free to someone willing to undertake its renovation (11). While such opportunities are rare, they can offer a more affordable entry point into the market for those prepared to take on a renovation project.

The Australian housing market as a whole has shown some resilience, with house prices expected to return to their peak in the coming months (10). This is positive news for current homeowners, but it may also mean that affordable options for first-time buyers will continue to be scarce.

On a more positive note, the construction sector may experience some relief in the coming months, as CoreLogic reports that growth in Australian construction costs is finally starting to ease (8). This easing of construction costs could potentially lead to more affordable housing options in the future, but it remains to be seen how this will impact the overall market.

Superannuation Reform and its Impact on the Housing Market

The recent superannuation reform has been criticised as a missed opportunity to address housing affordability and the needs of both younger generations and retirees (9). The reform could have been used to create incentives for investment in affordable housing or to assist first-time buyers in entering the market. However, the current legislation has not made significant strides in addressing these issues.

According to the article, the lack of affordable housing options for young Australians has long-term implications for the country’s future economic growth and social stability. The missed opportunity to use superannuation reform as a means to alleviate these issues means that more Australians may struggle to enter the housing market, further widening the wealth gap

Government and Regulatory Responses

As the housing crisis in Sydney continues to worsen, there is growing pressure on the government and regulatory bodies to take action. The call for increased regulation of rent tech data by CHOICE (7) is just one example of the need for more oversight to protect the rights of renters. In addition, the government could explore options to incentivise the development of affordable housing and provide support for first-time buyers. Some potential interventions might include:

  1. Inclusionary zoning (S1): This policy would require developers to include a certain percentage of affordable housing units in new residential projects. This approach has been successful in other countries and could help increase the availability of affordable housing options in Sydney.
  2. Rent controls (S2): Implementing rent controls could help prevent excessive rent increases and provide some relief to tenants who are struggling to afford their current accommodations. However, critics argue that rent controls can discourage investment in the rental market and lead to a decline in the quality of rental properties.
  3. Housing subsidies (S3): Providing financial assistance to low-income renters could help alleviate some of the financial pressures faced by tenants in Sydney. This could take the form of direct rental assistance, housing vouchers, or tax credits for renters.
  4. First-time homebuyer incentives (S4): The government could introduce programs to help first-time buyers enter the market, such as low-interest loans, grants, or shared equity schemes. These initiatives could make it more feasible for younger Australians to purchase their first home and help alleviate the pressure on the rental market.
  5. Infrastructure investment (S5): Investing in public transportation and other infrastructure projects could help reduce the demand for housing in high-cost areas by making it more convenient for people to live in more affordable neighborhoods.
  6. Land tax reform (S6): Adjusting land tax policies to encourage the development of underutilised land could help increase the housing supply and promote more affordable housing options.

These potential interventions could help alleviate the housing crisis in Sydney and ensure that affordable housing options are available for all Australians. However, implementing these measures would require significant political will and cooperation among various stakeholders, including developers, property owners, and tenants.


The Sydney housing market continues to face significant challenges, with rising rents, a chronic supply shortage, and concerns about the broader economic outlook. The impact on renters and potential buyers is severe, with a widening wealth gap and a lack of affordable options for those looking to enter the market. Despite some unique purchase opportunities and easing construction costs, the current market conditions remain challenging for many Australians.

The recent superannuation reform has failed to adequately address the housing market’s challenges, leaving many Australians feeling uncertain about their financial futures. The government and regulatory bodies must consider taking action to address these issues and ensure that affordable housing options are available for all Australians. Potential interventions include inclusionary zoning, rent controls, housing subsidies, first-time homebuyer incentives, infrastructure investment, and land tax reform.

Implementing these measures will require significant political will and cooperation among various stakeholders. However, by working together to address the housing crisis in Sydney, the government, regulatory bodies, and the private sector can help ensure that affordable housing options are available for all Australians, promoting greater social and economic stability in the region.


(1) https://www.abc.net.au/news/2023-04-12/why-rents-australia-increasing-cause-interest-rates-immigration/102208316

(2) https://www.domain.com.au/news/the-sydney-kitchlet-that-costs-340-a-week-to-rent-2-1206719/

(3) https://www.corelogic.com.au/news-research/news/2023/chronic-supply-shortage-causes-reacceleration-of-australian-rental-market

(4) https://www.domain.com.au/news/waiting-for-a-fire-sale-is-it-a-good-time-to-buy-a-house-yet-2-1206495/

(5) https://www.abc.net.au/news/2023-04-12/one-million-in-poverty-nsw-gap-worsening-sydney/102206262

(6) https://www.abc.net.au/news/2023-04-12/imf-global-economic-outlook-downturn-australia-housing-market/102211826

(7) https://www.abc.net.au/news/2023-04-18/choice-rent-tech-data-renters-apply-snug-regulation-data/102231206

(8) https://www.therealestateconversation.com.au/news/2023/04/18/growth-australian-construction-costs-finally-show-signs-easing-corelogic/1681745882

(9) https://www.therealestateconversation.com.au/news/2023/04/14/superannuation-reform-opportunity-lost-assist-younger-generations-and-retiree

(10) https://www.therealestateconversation.com.au/news/2023/04/18/when-will-house-prices-be-back-peak/1681762930

(11) https://www.abc.net.au/news/2023-04-18/sydney-home-in-greenacre-offered-for-free-for-renovation/102234636

(12) https://www.abc.net.au/news/2023-04-24/rental-blacklists-tenancy-databases-should-you-be-worried/102249222

Supplementary References

(S1) Gurran, N., & Whitehead, C. (2011). Planning and affordable housing in Australia and the UK: A comparative perspective. Housing Studies, 26(7-8), 1193-1214. https://doi.org/10.1080/02673037.2011.618982

(S2) Hulse, K., & Milligan, V. (2014). Secure occupancy: A new framework for analyzing security in rental housing. Housing Studies, 29(5), 638-656. https://doi.org/10.1080/02673037.2014.920769

(S3) Pawson, H., & Milligan, V. (2013). Australian housing policy: 50 years of failure? In J. R. Figueiredo & H. Alvelos (Eds.), Proceedings of the ENHR 2013: Overcoming the Crisis: Integrating the Urban Environment (pp. 1-16). European Network for Housing Research.

(S4) Reserve Bank of Australia. (2021). First Home Buyer Scheme. Retrieved from https://www.rba.gov.au/publications/smp/boxes/2021/feb/a1.html

(S5) Gurran, N., & Bramley, G. (2017). Urban planning and the housing market: International perspectives for policy and practice. Palgrave Macmillan.

(S6) Ingles, D. (2016). The case for a land tax switch in Australia. Tax and Transfer Policy Institute, Crawford School of Public Policy, The Australian National University.