How do rental vacancy rates work?

While understanding the current market is not a perfect science, there are a number of market trends that illustrate what home buyers and property investor customers may be looking for over time. The rental vacancy rate fluctuates over time in a similar fashion to property and business cycles. In the case of national rental vacancy rates, it is generally accepted that the fluctuation ranges from approximately 4.5% to as low as 1.5%.

What has happened in the most recent cycle?

In recent times the vacancy cycle has taken approximately 10 years to complete. With this in mind, the trend would indicate that vacancy rates are likely to increase over the medium to long term. Although difficult to measure, statistics indicate that the average Australian vacancy rate lies close to 1.5%, equating to approximately 5% vacant days annually per rental property. Higher demand in markets such as Sydney are believed to have contributed to a vacancy rate closer to 1%, while it is anticipated that slightly lesser demand in cities such as Perth may be closer to 2%.

What will this mean for Australian house prices?

As for the future, while the value of rental property is likely to increase over time, there is potential that rental price increases may outstrip the general price of goods and services in the foreseeable future. Taking this into account, there may be market opportunity for property investors seeking rental returns into the future.

Who decides to buy their own home?

Ideally you don’t want to rent your investment property to someone that is just going to move out and buy their own home. Statistics have shown that the likelihood of home ownership increases over time. A number of factors could be considered to be contributing towards this trend:

Family structure – depending on the circumstances, it is more common for singles and young couples (up until the 30s both with and without children) to seek rental accommodation.

Housing costs – Statistics indicate that singles and young couples (up until the mid 30s both with and without children) commonly seek rental accommodation. It is also more common for people to have greater access to personal wealth and real estate purchasing power with age.

Lifestyle portability – due to occupation, education and general levels of family commitment, it is possible that younger people may be more transient in their youth and depending on their circumstances are stronger candidates for shorter residential tenure, making renting more common. As people age, they tend to prefer residential security and more substantial housing arrangements.

How to invest in real estate with no deposit

It is possible to buy a real estate investment with no deposit. 100% finance for investors is now available for professionals with good incomes and excellent credit histories. Investing in units that have become positively geared in recent times in areas such as Sydney, Melbourne and Brisbane is easier than ever despite the global credit crisis.

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