What is the Vacancy Rate?
The vacancy rate is the percentage of all rental properties in a specific area that are unoccupied and available for rent.
Vacancy Rate = Number of Vacant Properties / Total Number of rental Properties ×100
A vacancy rate of 3% is generally considered a healthy, balanced market in Australia.
Australia’s Current Reality
The national rental market is exceptionally low. Recent figures show Australia’s national vacancy rate is at or near record lows (often around 1.2%−1.5% nationally), with many capital cities and regional hotspots sitting even lower. This means the properties are getting occupied quicker.
Why This is CRITICAL for property investors?
A low vacancy rate is the best friend of a property investor because it affects your bottom line in three major ways:
1. Maximised Rental Yield & Cash Flow
High Demand = Faster Income: In a tight market (low vacancy), there are far more renters than available properties. This means your property will likely be leased faster, dramatically cutting down the time it sits empty and costs you money (lost rent, paid mortgage).
Stronger Rental Increases: Scarcity gives landlords leverage. Low vacancy rates allow you to command higher rents, which directly boosts your rental yield and improves your cash flow.
2. Indicator of Future Capital Growth
Early Warning System: Often, renters are the first to move into suburbs that are improving (e.g., due to new infrastructure or amenities). A rapidly falling vacancy rate is an early sign of increasing demand, which can foreshadow future property price growth.
3. Risk Mitigation
Tenant Quality: When applicants are queuing up, you have a larger pool of potential tenants, allowing you to be more selective and secure high-quality, long-term renters, reducing turnover and maintenance headaches.
The Investor’s Takeaway
A low vacancy rate confirms you’re investing in an area where demand is high and persistent. It reduces the risk of long vacant periods and maximises your income—which is essential for servicing your investment loan.
Ready to find your next high-demand investment property and secure finance that works for you
