Sydney tightest vacancy rates at 1.5%

A recent report by SQM Research has revealed that Sydney is currently experiencing the tightest vacancy rate of all the Australian capital cities, with residential vacancy rates hovering around the 1.5% mark.  Not surprising news to us, considering the lower number of investors in the market over the last few years. Given Sydney’s affordability issues and high entry costs to gain a foot in the door, it’s small wonder that investors can’t afford to buy and have subsequently shun residential property in favour of other asset classes, in recent years.

However, with yields continuing to rise on the back of tightening rates, it seems that the tide may well be turning.

MD Louis Christopher also said the middle and outer suburbs of Sydney would represent good value for investors over the next 12 months, especially if the incoming government took a decision to boost the city’s housing market by cutting sales tax.

“There is an under-supply situation occurring for NSW. We are actually building less dwellings now than in 1984 and have been building less since the year 2000,” he said.

“In 1984, the population of Sydney was about 3.2 million. We now have 4 million”

It’s a well known fact that, due to high prices, that freestanding houses in the more popular parts of our city are not the first choice for investors.  Many, instead, elect to buy into a unit or townhouse complex as a cheaper alternative.  With households shrinking, it makes logical and financial sense for Sydneysiders to downsize into affordable dwellings, investing in lower maintenance assets whilst retaining funds for financial security later in life.

However, there will always be a demand for rental properties as not everyone wants to or indeed can afford to buy into the “Great Aussie Dream” of home ownership.  Whilst demand is strong and supply is low, with just 1.5 properties out of 100 available to rent, and affordable interest rates, it may well be time for investors to take a fresh look at what the Sydney property market has to offer.