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Home › Glossary › Rental Vacancy Rate
The rental vacancy rate is a key indicator of rental market strength and directly influences how easy it is to find tenants and what rent you can realistically charge. A low vacancy rate usually means high tenant demand, faster leasing times and stronger rent prices which is ideal for investors. A high vacancy rate suggests more supply than demand which can lead to longer vacancy periods, rent reductions or increased competition among landlords. Vacancy rates can vary significantly between suburbs based on local employment, school zones, infrastructure, population growth and housing types. Investors monitor this data to assess whether an area is likely to produce stable rental income or whether it carries risk. When selling, a low vacancy rate can be a major selling point because it signals strong rental demand to potential investors. A knowledgeable agent uses vacancy rate trends strategically to highlight the property’s income potential and reduce perceived risk.
You own a unit in a suburb where the vacancy rate has dropped to 1.2 per cent, which is considered extremely low. Your property manager advises that demand is strong due to a nearby hospital expansion bringing new workers into the area. When you list the property for lease, several enquiries come in within the first 24 hours and your open inspection has high attendance. You quickly secure a quality tenant at a slightly higher rental price due to the competitive market. A year later, you decide to sell, and your agent highlights the low vacancy rate in marketing materials to attract investors. Buyers appreciate the steady rental demand and are willing to pay a premium for a low-risk investment, resulting in a strong sale price.
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