SQM Vacancy Rate info this month shows the national residential rental vacancy rate increased in June 2019 to 2.3%, an increase from 2.2% in May.
Nearly all capital cities recorded minor increases ranging from 0.1% to 0.2% over the month…
Sydney continues to have the highest vacancy rates in the country at 3.5%, an increase of 0.2%. This is the highest for Sydney since 2005. Perth’s vacancy rate is not far behind at 3.2%, having increased 0.1%.
Melbourne’s vacancy rate increased to 2.0%.
So what does all this mean?
BE CAREFUL to include vacancy rate as a KEY METRIC in investing decisions. Remember THE LOWER THE BETTER. We prefer to invest in a market where the vacancy rate is around 2% or lower (1.5% is even better). One recent investment property we purchased for a client (exchanged last week) was in Cooma, a town with a vacancy rate of 0.6% and falling due to infrastructure projects and employment bringing people into the town. Rents are rising rapidly as I type in that town.
What does a HIGH VACANCY do to you?
It means falling rents, lower than anticipated yeilds, negative cashflow, empty property for weeks in between tenants. IN SHORT HIGH VACANCY = STRESS!
What does a low vacancy rate do for you?
It means rising rents, improving cash flow, getting to pick and choose your tenant from multiple applications, short vacant periods in between and OWNING PROPERTY IS A PLEASURE!
Vacancy rate is a Very. Big. Deal.
So… let’s cut to the good stuff: Below are 20 fantastic areas with Vacancy rates under 2% and evidence based infrastructure reasons you should consider them:
Jindabyne 0.2%
NSW primary Ski tourist area (historically considered risky) but growing tree change destination and summer bike related tourism is turning into a year round destination…reducing risk and increasing returns.
Murrumbateman 0.3%
Rural tree change and commute option for Canberra workers with some trendy wineries.
Yass 0.3%
Thriving beef/sheep region and lately considered a viable rural commute option for Canberra workers.
Cooma 0.6%
Affordable, Distant commute option for Canberra workers, Snowy Hydro 2.0 project is bringing hundreds of new high grade tenants into town.
Kurri Kurri 0.8%
Close to new Mainland Hospital, affordable older homes with larger blocks & close to Newcastle for work.
Tweed Heads 0.9%
Ideal Retirement climate, growing international airport, large new regional hospital, perennial tourism and surf/beach industry.
Coffs Harbour 1.1%
Ideal retirement climate, regional airport, quality beaches.
Unanderra 1.1%
Express trains viable commute option to Sydney, close to Wollongong University, it is the first affordable option heading south in Wgong compared to the northern suburbs which are more expensive
Lennox Head 1.1%
Ideal retirement climate, surf, beaches, growing arts scene.
Banora Point 1.1%
Ideal retirement climate, new hospital (as per Tweed) affordable compared to Byron Bay.
Queanbeyan 1.2%
Affordable housing next to Canberra, comparably investor friendly rules (ie freehold land ownership, less onerous land tax rules)
Dubbo 1.2%
Major Central NSW regional hub, university, hospital expansion, agricultural and mechanical repair centre.
Goulburn 1.3%
Canberra commute option on the Sydney side, correctional centre.
Cessnock 1.5%
Has historical buildings and growing coffee culture, Close to new Mainland Hospital, affordable older homes with larger blocks close to Newcastle
Dapto 1.5%
Express trains commute option to Sydney, close to Wollongong University, affordable option heading south in Wollongong next to northern suburbs which are more expensive. Growing new suburbs south and west.
Albury 1.5%
Major regional hub, inland rail project, infrastructure centre between Melbourne and Sydney so logistics employers often base themselves here, Army Base.
Wagga Wagga 1.7%
Major regional hub, university, hospital expansion, Army Base.
Warilla 1.7%
Coastal affordable Wollongong option with beaches, lake, close new shell cove marina $2b, new train station, Albion Park road bypass.
Shell Cove 1.8%
Desirable southern Wollongong option with beaches, lake, new shell cove marina $2b, new train station, Albion Park road bypass, hospital expansion
Nowra 1.9%
3 road bypass projects (Berry, Berry to Bomaderry, Albion Park) reducing travel time, increasing volume and ease of traffic access from Sydney, major hospital expansion, new bridge, Army Base. Affordable sea-change destination and growing coffee culture.
Summary:
As you can see, there are many options for buying, moving, investing apart from the most commonly considered options of inner Sydney and Melbourne. As always do your research, know your markets, and be on the ground in the area.
Using vacancy rate to thin your buying short list could prove a very wise move.
Buying outside a major capital city doesn’t need to mean taking silly risks if you know what to measure.