National vacancy rate improves in January

23.8.13When you are investing in property to rent, vacancy rate figures can give a reliable indication of the market’s strength. It was a auspicious start to the new year for investors in New South Wales, with the latest SQM Research data showing that the national vacancy rate declined in the first month of 2015.

Many of the capital cities recorded declining listings of empty properties in January, with Sydney in particular showing its prowess in the rental game. This can be attributed to more renters pursuing leased property at the start of a new year, but also confirms the strength of the investment market across the country. Home ownership is becoming less likely for many households because of rising house prices, but rental property is surging in its place.

It is well worth keeping up to date with vacancy figures for this reason. These will indicate if it is the right time to dip your toe in the property investment pool, or if refinancing to buy another property is a tenable option.

Growing house prices spur the capital growth machine to life. Recent CoreLogic research showed only 22.2 per cent of Australian homes were sold for under $400,000 in 2014 – meanwhile, 20 years ago, 95.4 per cent of home sales fell into this price bracket. There were more home sales in the $1 million to $2 million bracket in Sydney than anywhere else in the country. While owner occupier homes fall by the wayside, investors are snapping up opportunities to take advantage of soaring prices and demand for rental properties.

The low national vacancy rate reflects this, something that will offer some reassurance to landlords. The number of residential vacancies dropped 0.3 per from 2.6 per cent to 2.3 per cent between December 2014 and January this year. While Sydney experienced a marginal 0.1 percentage point increase over 2014, its 1.8 per cent vacancy rate remains one of the lowest in the country.

Affordable houses are few and far between due to rising home values, making it increasingly difficult for households to move from rentals to home ownership – but investors are reaping the rewards of high rental demand.

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