Vacancy rates is a measure of the availability of rental properties in a particular area.
The vacancy rate is expressed as a percentage - it takes the total number of vacant (available) rental properties in the area and divides it by the total number of rental properties in the area.
Lets use an example to illustrate.
In the Vacancy Rates report below, we are looking at 2 postcodes -
2750 - suburb of Penrith
2770 - suburb of Mount Druitt
The vacancy rate in Penrith (as at June 2024) is 0.76%, and in Mount Druitt it is 0.67%.
The number in brackets next to each percentage is the number of available rental listings in the suburb - in the case of Penrith that is 71 available rental properties, and in case of Mount Druitt is is 69 available rental properties.
To calculate the vacancy rate, just take the available rental property listings in the suburb and divide it by the overall number of rental properties in the area.
For Penrith, the total number of rental properties in the area is approximately 9,300 and the number of available properties for rent is 71. Therefore we take 71 and divide it by 9,300, which is gives us 0.76% as shown in the report. This is a vacancy rate below 1%, which is considered a very tight rental market, which is is good for landlords.
For Mount Druitt, the total number of rental properties in the area is approximately 10,300 and the number of available properties for rent is 69. Therefore we take 69 and divide it by 10,300, which is gives us 0.67% as shown in the report. Again this is an excellent vacancy rate from a landlord perspective as it indicates strong rental demand in the area.
Vacancy rate is a very important factor that every property investor should consider when purchasing an investment property. A vacancy rate below 2% is considered healthy for a landlord. A vacancy rate at around 3% can be considered a balanced market, while a vacancy rate above 4% indicated minimal rental demand in the area.
You can get access to vacancy rates for all postcodes by going and registering to PropertyDirector's Essential plan here - https://www.propertydirector.com.au/choose-plan.
