The Value of Vacancy Rates
Vacancy rates are the barometer of how well the rental market is doing.
What does the Vacancy Rate mean to our Landlords?
The latest REIWA data shows that the Perth vacancy rate has fallen to less than 1%, the lowest level in 13 years!
Vacancy rates measure the number of available rentals in the current market and is calculated by dividing the total number of rental properties by the number of available properties. If we have 500 rental properties in our portfolio and only have 5 available for rent (untenanted) our vacancy rate will be 1%.
The great news is that the demand is high and the supply low which will help increase the rents when your property becomes available or, after 31 March 2021 (for current new leases only) the increased rent is favourable for new investors with a higher return on their money. Once rents have increased, we will most probably see property values increase.
When looking at buying an investment property, vacancy rates are going to be very important. You want your investment property to be rented and you don’t want it to stand dormant for weeks or months. It works in reverse as well; locations with high vacancies seldom deliver price growth. It is important to note that Perth has very few COVID restrictions in place and people are getting on with business as usual.
The benefit for our Landlords includes the following:
- Potential greater selection of applicants and therefore greater chance of being able to select a quality tenant.
- Potential for increased rental rate as the tenant market competes for limited properties and will not be turned off by higher rates.
- Less fellow landlords competing for the available tenant pool.
Please keep in mind that if your property is vacant for longer than expected it could be for the following reasons:
- Turn around time can cause vacancy between one renter moving out and another renter moving in.
- Vacancy can occur due to major repairs.
- Property located in an undesirable area is harder to rent, creating a greater number of days vacant.
- Rental rates above market can also make property difficult to rent, increasing the total number of days a property sits vacant on the market.
If you are interested in renting your property or are wanting to know more about our Celsius Property Management services, please contact me at any time.
Kind regards,
Senior Property Manager