Ewan's Blog

A vacant story

Wednesday 21 Mar 2018

In residential real estate the common wisdom is that the key players are buyers and vendors, with little focus required on anyone else. In my opinion that’s wrong and those who choose to believe it do so at their peril. 

It is vital to always consider the end user. That means buyers and sellers need to keep focus on the vacancy rate. How many people are looking to lease tells a story that is important to value and demand and it is a story relevant not only to the obvious audience of investors. Even those looking to purchase a home to live in need to keep in mind the impact on value told through the lens of changing trends in the vacancy rate.

The vacancy rate for Sydney’s inner suburbs is sitting at 1.8 per cent. That number is interesting in the context that this time last year, when the sales market was absolutely booming, the vacancy rate was sitting at 1.6 per cent. 

The intense sales market has eased and there is a greater supply of properties coming to market but demand for rental properties remains strong. As I reported a few weeks ago our teams on the ground leasing properties from Penrith to Green Square, Wentworth Point to Bondi Junction are having no trouble securing tenants. It appears those in the market to lease haven’t automatically moved into the market as buyers.

Our team is finding is that the turnover of properties is lower than I have seen in a long time. We have happy tenants who are actively choosing a local community and lifestyle and happy to stay renting.

It is also important to point out that the concern raised by many that a potential glut of new developments would take the shine off slightly older properties hasn’t come to fruition. We just aren’t seeing it. Both new and older properties are being absorbed. Of course owners need to remain cautious about setting realistic rents but to be honest I think savvy owners recognise that should always be the case.

More broadly the low and stable vacancy rate is a good sign for the stability of the sales market. It reflects the depth of demand and the strength of the market. It is a good story for all.