Low Vacancy May Pressurise Tenants

Rental market is tightening up all across New South Wales, with vacancy rates continuing to dip. Inner Sydney has already witnessed a two-year low- never before has it hovered around the 1.5% mark since March 2012.

Keep hunting fresh properties investors!

In light of these statistics, it becomes crucial for property investors to keep hunting for new properties. As is the situation presently, rental rates may shoot up given the imminent threat of an interest rate hike and shortage of available rental properties.

Upturn phase

We are almost through the recovery phase of our property cycle and already Australia has changed courses from ‘stabilisation’ to ‘upturn’. In the wake of this fact, it is only logical to assume our rental yield getting a little erratic. The undersupply which threatens us- and makes the noise about high rental rates permissible- is not going to define Australia in coming times.

Construction industry will soak pressure

Yes, the data is never ambiguous and we are certainly feeling some pressure due to low vacancy but rampant movement in the construction industry will soak in the pressure in time.  Already, there is a heart-warming line of fresh constructions being carried across the urban and regional centres. For long, we have complained about vacant rental plots. The lack of vacancy- in light of what we have gone through in the recent past- is a welcome change to me.

Rental rates will auto-correct themselves

If rental rates shoot, it will bring in the equation of capital gains (its antithesis) to the fore, too and property investors won’t mind mining out their ‘battle spoils’ then. Also, the rental yield has historically been a fluctuation-averse entity and it corrects itself shortly after showing any awkward shift. Thus, I expect the vacancy rates to stabilise in the immediate future.

Don’t you feel rental rates auto-correct themselves?