Sydney’s Rental Crisis: What the Next Five Years Could Look Like.
Sydney’s rental market is entering one of its most challenging periods in decades. Experts warn that affordability pressures are set to intensify over the next five years, creating serious hurdles for renters, investors, and policymakers alike. Vacancy rates are expected to shrink further, rents will continue to rise faster than wages, and the supply of new housing is struggling to keep up with a growing population. For everyday Sydneysiders, this means finding a home may become increasingly competitive and stressful.
According to CBRE’s 2025 Apartment Vacancy and Rent Outlook, Sydney’s apartment vacancy rate could fall from 2.2 per cent to around 1.2 per cent by 2029. Demand for housing is projected at roughly 38,000 units per year, yet apartment supply is expected to average just 12,200 annually. This significant mismatch ensures that competition for available rentals will remain fierce. Securing a lease could become even more challenging, particularly for those on average incomes, while the pressure on rental affordability continues to rise.
Rental prices themselves are climbing faster than wages, creating additional strain on households across the city. In Sydney’s Inner West, for example, median weekly rents have already reached approximately $950, with some properties exceeding $1,100 per week. For many renters, this leaves little room for choice. Families, young professionals, and essential workers may be forced to compromise on location, space, and lifestyle, while even those earning above the city’s average income can struggle to find suitable housing in desirable areas.
Efforts to increase housing supply, such as the NSW government’s “Building Homes for NSW” program, aim to deliver up to 30,000 new homes over the next several years, including 8,400 public units. While this is a positive step, experts note that the sale of public land to private developers has limited the potential impact of these initiatives. Planning delays, logistical hurdles, and resistance from local councils mean that even when new developments are approved, their delivery may not keep pace with demand, leaving affordability pressures largely unresolved.
Some analysts suggest that developing housing in Sydney’s outer suburbs could offer partial relief. Land is more plentiful and generally less expensive, allowing new housing to be more affordable than in the inner city. However, without significant investment in infrastructure and transport links, these areas may remain impractical for many renters who work or study closer to the CBD. As a result, the affordability gap is unlikely to close unless housing and transport policies are carefully aligned.
Looking ahead, Sydney’s rental market is expected to remain competitive and costly over the next five years. Renters will need to be proactive and informed, exploring a variety of options and strategies to secure homes. At the same time, policymakers and developers must focus on increasing supply, improving affordability, and streamlining planning processes. The decisions made in the coming years will have long-term implications for Sydney residents and the overall health of the city’s rental market.
