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A research house they are quoting, SQM, is suggesting that rental growth is going to exceed inflation and that for the months of both January and February there has been a continued decrease in vacancy rates nationally, with vacancy rates currently sitting at 1.7% of all available properties.
When you consider that the industry considers that a vacancy rate of 3% translates to full occupancy, because the 3% of dwellings that are left unoccupied reflect those properties that no one wants to live in, it fair to say that that either:
• We have a looming shortage of housing (that has been spoken about for some time), or
• We have a declining standard of what is the accepted minimum requirement for a rental property to attract a tenant
The most likely is that we have a housing shortage and adding to this pressure is that we are also experiencing some of the lowest new housing approvals in more than 10 years across the country, in all major cities.
“Overall, these vacancy statistics reveal an ongoing tight rental market nationwide, with some cities recording tighter results than others.
“This has been resulting in higher than average rental growth per annum as in the case in Sydney, where rents have grown on a compounded basis by 8.8 per cent per annum for the past five years.
“With this type of vacancy rate result, it implies once again that this year we will see rents grow faster than inflation.” Said SQM Research managing director Louis Christopher.
History shows that this is tightening of rental demand and increasing rental yields is the pre-cursor to growth in property values. Depending of the level of growth, or comparative lack of supply property values will be impacted accordingly, so population centers with tighter supply should see higher yields coming through and as a result greater capital growth.
This is great news for property investors since growth is where the investor accumulated wealth comes from.
Taking a position a little closer to home, if you are an investment property owner and your property is vacant maybe the question needs to be asked as to why this is. In this market even an average property management company should be getting close to that 1.7% overall vacancy mark. At GR8 we are sitting under the national average and have done consistently.
The latest Real Estate business Journal of Monday 28th March is headlined
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