Sydney Vacancy Rate at Abysmal Low

Vacancy rate does not need to come down to zero level for the experts to call it “crisis level”. Pete Wargent, in a well-researched article for the Property Observer, says Sydney’s 1.3% vacancy rate is clearly a cause for concern.

Vacancy rate

The property market is fashioned out in kind of cycles where the fundamentals remain intact. Taking a cue from this fact, we can only agree that when prices increase, construction goes up and once this happens we may have a solution for the vacancy rate.

Inner west ring

For long, the inner west ring and proximal areas have seen serious supply-cramp and this has worked towards reducing the vacancy rate to abysmal levels. Builders and developers (especially in cases of large-scale constructions) have been very wary and this has also reflected badly on the psyche of an ‘in stupor’ labour market. This has led to diluted construction activity the fallout of which is low vacancy rate.

In all, Wargent argues how this can be detrimental for people wanting to choose their best rental properties.

You can read the original article here.

Rental yield

I think unless the vacancy rates really rise rental yields may show an upward curve. This happening, we will see a beeline of positively geared properties wherein the landlords easily meet the mortgaghe payments through the rent on their properties. How the situation may impact capital growth remains to be seen (at large a conjecture at the given moment).

Moreover, the population growth witnessed in the Sydney area will only become stronger given the present ‘mortality rate’, ‘life expectancy’ and net migration. This may create some real flutter in vacancies of rental property, too.

How do you see rental yields moving in inner city west?