Australia's two biggest cities may be obsessed with rising property prices, but as two international financial powerhouses, Sydney and Melbourne tenants are probably going to have to get used to it: financial centres are expensive to live in.
It costs more than double to rent a one-bedroom apartment in the home of Wall Street - New York - and in the fin-tech hub of San Francisco than it does in Melbourne. It's also still cheaper to rent in Sydney than in Boston, Hong Kong, Geneva, Zurich, Singapore and Tokyo, a new study has found.
But the research on global rents in financial centres showed Sydney and Melbourne were probably more expensive than they should be when compared to how the cities stacked up as financial markets.
Sydney is the 11th top financial centre based on the Global Financial Centres Index, but the ninth most expensive, according to the study by US apartment search website RENTCafe. Melbourne was the 24th biggest financial city, but the 18th most expensive.
World's top 30 financial centres. Rankings based on Global Financial Centres Index. Source: RENTCafe
The financial services sector is the biggest sector in the Sydney economy, with banking and finance sector forecast to account for one in every five dollars generated by the city's economy by 2026. Financial and professional services have also taken over from the declining manufacturing industry in Melbourne, accounting for 13 per cent of the economy last year.
The concentration in the CBD of "knowledge economy" jobs - such as those in the financial sector - has led to concerns young people won't be able to conveniently access the majority of jobs by 2031 because they will driven to the fringes of the city due to affordability issues.
The study compared average rents for one-bedroom apartments between 55-85 square metres in the top 30 financial cities, based on housing market data from sources including the Global Property Guide.
A RENTCafe spokeswoman said all 30 cities had a thriving economy, robust investment sector, and plenty of high-paying jobs for young professionals. But the difference in rents lay mostly in the historical price base and how well the development markets responded to the increasing demand for apartment living.
"Australia's two financial powerhouses benefit from the same strong demand from businesses and new workforce, but compared to their North American counterparts, they offer a more relaxed rental landscape, including lower rents," said the spokeswoman said.
"Compared to these hyper-expensive urban hubs [such as New York and San Francisco], Sydney and most particularly Melbourne emerge as real bargains for those working in the financial and economic sectors."
The high rent difference between Sydney and Melbourne was likely due to an oversupply of new rental apartments in Melbourne, the spokeswoman said, whereas in Sydney there were no such issues.
The study also found London landlords asked for relatively small rents, despite being the top-performing financial centre of the world. It's cheaper to rent a one-bedroom flat in London than in Sydney and Melbourne, according to the research.
"The beauty of London lies in its variety," the spokeswoman said. "It's spread out enough to offer housing for all tastes and budgets. While pricey rentals are concentrated in Kensington and Chelsea, there's a huge inventory of decently-priced flats in east and south-east London that helps the overall average stay within acceptable levels."
It costs $4820 per month ($US3680) to rent a one-bedroom apartment in New York - perhaps only affordable to those on Wall Street wages.
Financial centres ranked on average monthly rents ($US). Financial city ranking in brackets.
- New York City - $3680 (City rank: 2)
- San Francisco - $3360 (City rank: 6)
- Boston - $2930 (City rank: 7)
- Hong Kong - $2740 (City rank: 4)
- Geneva - $2320 (City rank: 23)
- Zurich - $2200 (City rank: 9)
- Singapore - $2050 (City rank: 3)
- Tokyo - $2050 (City rank: 5)
- Sydney - $2040 (City rank: 11)
- Dubai - $2040 (City rank: 18)
- Los Angeles - $2030 (City rank: 25)
- Seoul - $1990 (City rank: 14)
- Washington DC - $1940 (City rank: 10)
- Shanghai - $1910 (City rank: 16)
- Beijing - $1900 (City rank: 26)
- Paris - $1730 (City rank: 29)
- Chicago - $1720 (City rank: 8)
- Melbourne - $1690 (City rank: 24)
- Cayman Islands - $1680 (City rank: 28)
- London - $1650 (City rank: 1)
Average rents for one-bedroom apartments in the world's top financial cities in US dollars. Photo: RENTCafe
