Sydney is currently experiencing a challenging rental market, after tightened lending conditions, foreign investor restrictions and an influx of recently completed developments flipped the previous market on its head.
Other than the current value of your investment, if there’s one piece of market information you need to stay on top of as a landlord, make it your suburb or area’s vacancy rate. Put simply, the vacancy rate is a statistic that shows the percentage of properties that are unoccupied in an area at a given time. It’s a sign of the balance between supply and demand – the higher the rate, the more difficult it becomes for landlords to find tenants.
It goes without saying that this has a direct impact on an investor’s bottom line, because no tenant equals no cash flow. It makes it more important than ever for landlords to prioritise retaining their tenants and to consider what makes their property competitive in the market at the time.
As of March 2019, the city’s overall vacancy rate was at 3.6%, according to REINSW – up from 2.2% just a year earlier.
If we look at the Lower North Shore specifically in this data from SQM Research, after peaking in December at around 4.1%, vacancy rates started to decrease in January and February however started to rise again in March to 4.3%. However, it’s also higher than it was a year ago at around 1.9% and could be a sign of some more challenging times on the horizon.
It’s too soon to tell how vacancy rates will play out longer term in a weaker market. Plus, vacancy rates vary across suburbs too, so while the overall stat may be a little higher, your property might still be in one of the suburbs with the area’s lowest rates. In our experience, variations in vacancy rates can also be down to seasonal conditions – the start of the year, winter, and even school holidays all have an impact on tenant demand, and vacancy rates.
High vacancy rates can be tricky to manage, but they aren’t the end of the world if you know the market and focus on keeping your property desirable. After all, high vacancy rates don’t mean no one is looking for a rental, just that it’s more competitive out there.
To avoid long or continuous vacancies for your investment property, we suggest: