Sydney suburbs which recorded rent price drops, as 'real test' looms

New report paints mixed picture of Sydney's rental market Sat 18 Jul 2026 at 7:11am A new report paints a mixed picture of Sydney's rental market with major surges and drops in rent prices recorded in certain suburbs, though a "real test" is to come. Domain's June quarterly rent report showed Sydney house rents surged 6.3 per cent, or $50, over the quarter to a record $850 a week. The report noted it as the largest increase of any capital city and largest quarterly result since 2022. As for the data on annual changes among specific suburbs, Abbotsford saw a 41.3 per cent increase in the median weekly asking rent for houses. Milperra recorded a 29.4 per cent increase and Monterey recorded a 28.9 per cent increase over the same period. Overall, Sydney's unit rents rose by an average of 4 per cent ($30) to record $780 a week — the largest quarterly increase in three years, according to Domain. The three suburbs with the biggest increases in median weekly asking rents for units over the past year were Concord West (24 per cent), Enmore (19 per cent) and Millers Point (18.2 per cent). What is particularly curious to economists and local property managers, however, are the rental price decreases seen in certain suburbs for both units and houses. Artarmon recorded the most significant annual change, with the median weekly asking rent for houses falling by 13 per cent. Dundas recorded an 11.8 per cent decrease, Kenthurst saw a 10 per cent decrease and Clovelly recorded a 9.1 per cent decrease within the same period. Unit rent drops were less pronounced compared with houses. The two suburbs recording the largest decreases in apartment rents were Northbridge (6.3 per cent) and Pagewood (4.5 per cent). Impact of the 'affordability ceiling' Domain's chief residential economist Nicola Powell said the sharp rental increases seen in some Sydney suburbs were too sudden and concentrated to be explained by seasonal factors alone. "Multiple things have happened this year which has really created the foundations, meaning that landlords are pushing through rent hikes," she said. Dr Powell acknowledged the flow-on effects of Labor's restrictions to negative gearing and capital gains tax discounts for how landlords manage their housing investments. "Even when we remember that there would be grandfathering to the taxation changes, I think ultimately there will be a bit of behavioural change regardless. "And what that means is rents are going to go higher." As for suburbs like Abbotsford, which are very small in size but popular with renters, Dr Powell said relative supply and owner-occupier ratios within such a small geographic footprint likely played a role in higher rental prices. Dr Powell also explained the possible reasons behind why other Sydney suburbs recorded a drop in rent prices. "It could be reflecting that localised areas kind of reach that affordability ceiling, and that is a really powerful dynamic across the rental market," she said. "For a tenant, what that means is they cannot afford rent in a suburb, so they look to another suburb or a smaller property size — so they're perhaps edging elsewhere to get greater value for money." Overall, the Domain report projected a "challenged" outlook for Sydney's rental market in the near future. "The real test will come in the months and years ahead as investors adjust to the new policy environment and those decisions begin to flow through to housing availability and rental conditions," Dr Powell said. Laing+Simmons Artarmon head of property management Jeremy Ong said while rental listings had been softer recently in the suburb, he was surprised to see the report's figures. "People are looking to contain household budgets a bit in the lower north shore, and we have seen people moving for cost reasons," he said. "Houses don't make up a significant amount of stock in the suburb compared to apartments, so the lack of those specific properties hitting the market could also be skewing the data." Mr Ong said he expected to see rental prices for Artarmon houses return to some stabilisation, particularly amid landlords' tax reform concerns. "In the context of the holding costs of properties going up, at the end of the day a lot of these costs are unavoidable and the owners have absorbed a lot of — they will likely have to reflect this in rental prices," he said.