What A Landlord Needs To Know About Vacancy Rates And How To Reduce Them

Mark Taylor , Principal/Licensee in Charge | 1 May 2019

Vacancy rates are high across Sydney, providing a challenge for investors in the Eastern Suburbs. Here’s what landlords need to know about what vacancies rates are and how to reduce them.

Sydney is currently experiencing a challenging rental market, after tightened lending conditions, foreign investor restrictions and an influx of recently completed developments flipped the previous market on its head. 

The result is high vacancy rates that, on the surface, give power back to tenants. But it’s not all doom and gloom for landlords if they choose to stay on top of the issue. With that in mind, let’s take a look at what’s happening with vacancy rates now and how to deal with them as an Eastern Suburbs investor. 

Why Do Vacancy Rates Matter? 

Other than the current value of your investment, if there’s one piece of market information you need to stay on top of as a landlord, make it your suburb or area’s vacancy rate. Put simply, the vacancy rate is a statistic that shows the percentage of properties that are unoccupied in an area at a given time. It’s a sign of the balance between supply and demand – the higher the rate, the more difficult it becomes for landlords to find tenants. 

It goes without saying that this has a direct impact on an investor’s bottom line, because no tenant equals no cash flow. It makes it more important than ever for landlords to prioritise retaining their tenants and to consider what makes their property competitive in the market at the time. 

Sydney Eastern Suburbs Vacancy Rates

As of March 2019, the city’s overall vacancy rate was at 3.6%, according to REINSW – up from 2.2% just a year earlier. 

If we look at the Eastern Suburbs specifically in this data from SQM Research, after peaking in December at around 3.25%, vacancy rates started to decrease in January and February however started to rise again in March to 2.6%. However, it’s also higher than it was a year ago at around 1.9% and could be a sign of some more challenging times on the horizon.

It’s too soon to tell how vacancy rates will play out longer term in a weaker market. Plus, vacancy rates vary across suburbs too, so while the overall stat may be a little higher, your property might still be in one of the suburbs with the area’s lowest rates. In our experience, variations in vacancy rates can also be down to seasonal conditions - the start of the year, winter, and even school holidays all have an impact on tenant demand, and vacancy rates.

How To Avoid Long Vacancies And Keep Tenants In Your Property 

High vacancy rates can be tricky to manage, but they aren’t the end of the world if you know the market and focus on keeping your property desirable. After all, high vacancy rates don’t mean no one is looking for a rental, just that it’s more competitive out there.

To avoid long or continuous vacancies for your investment property, we suggest: 

1. Speaking with your property manager about how competitive your property is in the current market, where it sits compared to other properties, and whether the rent you are seeking is enticing or deterring renters.

2. Considering renovations or refreshes that can add value or help your property stand out, such as air-conditioning, an updated bathroom or even re-painting. You could also consider add-ons, for instance, if your property has a garden you could include lawn mowing or garden maintenance in the rent. 

3. Prioritising tenant retention by communicating openly, handling repairs or maintenance issues quickly, and handling rent increases carefully.

4. Investing in a strong marketing and advertising campaign when putting the property up for rent.

Need Some Advice To Help Reduce Your Vacancy Rate?

Contact our team of specialists today. 

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