Market Update

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Vacancy Rates Shrink Further in Sydney

low vacancy rateAn article on the website realestate.view exhibits downright fear over the present vacancy rates in Sydney. Never since November 2011 have we seen the vacancy rates come down to 1.4%. Such low vacancy rates squarely imply that those seeking properties may not have any kind of choice in their hands.

Abysmal vacancy rates

While Middle and Outer suburbs have showed 1.6% and 1.5% rates of vacancy, the Inner suburbs- already the hottest yard in Sydney- have displayed a never-before 1.3%. This is -0.1% lower than the Sydney average.

All this, the article believes, has to do with deficit of the current planning system. The lack of perks for the first home buyers (FHBs) is only compounding the misery.

You can read the original article here.

Capital growth- rental yield imbalance

Lower vacancy rates mean tenants making a beeline for properties. This can lure landlords (investors) to heighten rental rates, thus affecting the rental yields positively. Even those investors who prefer negative gearing for higher capital growth may take the ‘rental return’ bait and go instead for the positively geared properties.

While all this may give a much coveted positive cash flow to the investors, a fast dropping vacancy rate can create a capital growth- rental yield imbalance in the economy, one that may be partially irredeemable for some time to come.

FHBs elbowed out

Clearly, the fact that FHBs are only sharing 4% of the market is weighing heavily on us. A silver lining perhaps is that 40% more dwelling approvals have been recorded by NSW this year. This shall help supply meet demand at a reasonable corner.

Will high dwelling approvals for units narrow the gulf between house and unit prices?