Residential vacancies fall in February

Residential-vacancies-dropped-in-February_157_6007244_0_14033698_300One of the key elements in maintaining a rental property is the ability to fill vacancies. There are any number of reasons a property can be left unoccupied, but fortunately the latest figures from SQM Research indicate that residential vacancy levels across the country improved in February. The proportion of properties without a tenant dropped 0.1 percentage point over February, with the study showing that most capital cities recorded a decline.

Sydney followed this trend, which is a particularly good sign for investors that rental properties are in hot demand. The vacancy rate in the Harbour City dropped from 1.8 per cent to 1.7 per cent in February, bringing the total number of vacant properties to 10,106. Nationwide, the number of unoccupied properties declined from 2.3 per cent to 2.2 per cent over the month, with 66,094 residential properties without a tenant. However, the figures were up slightly over the year as a whole, rising 0.1 percentage point from the same period last year.

Managing Director of SQM Research Louis Christopher  said a strong job market in many locations – particularly Canberra – is lending itself to improving vacancy levels. The Australian Bureau of Statistics showed that unemployment in the Australian Capital Territory is chugging along at the lowest level of anywhere in the country at 4.5 per cent in February. New South Wales is slightly up on this figure, but remained even 6.3 per cent in February in seasonally adjusted terms.

The state’s strong economic performance is good news for investors, but Mr Christopher said that below-par economic performance elsewhere will likely force vacancy rates up over the next year.

“Nationally, a continuation in below-trend economic activity will likely push the unemployment rate up towards 7 per cent, which will ultimately work to keep a lid on vacancy rates and rents in other capital cities,” Mr Christopher said in a March 17.

Negative gearing to be abolished?

SQM Research also shed light on rental prices in each of the capital cities. Sydney’s weekly rent prices for houses have continued to rise steeply over the past year, climbing 2.8 per cent over the 12 months to March 12. However, rents have plummeted in other locations. House rents in Darwin dropped 16 per cent over the past year, while Canberra also saw a 4.3 per cent decline.

Sydney has once again played an exception to the rule, but the overall decreases could indicate that investors are focussing on the benefits of long term capital growth. With rising house prices a key factor behind this strategy, policy makers have raised the issue of scrapping negative gearing to take some investment heat out of the housing market. Chief Executive of the Grattan Institute John Daley said negative gearing undermines affordability and should be on the top of the government’s reform list.

“Negative gearing is a sacred cow that should be ritually slaughtered sooner rather than later,” he said, as reported by the Sydney Morning Herald on March 17.

The rental market can be a tricky game to master. These figures highlight the importance of seeking advice from a property management or agent, whether you need advice on filling vacancies or deciding on an investment strategy.

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