Published 14 November 2023
Strengthening property prices have confounded most expert predictions thus far in 2023 with demand/supply dynamics more than offsetting the negative impacts of higher interest rates. The big question now is: what’s next? There’s one statistic, savvy Aussie property investors are particularly focused on for a guide as to what’s coming for residential property prices… the rental vacancy rate.
Ongoing undersupply of rental properties
According to SQM Research, Australia’s rental vacancy rate fell to 1.2% in August. That’s an extraordinarily low number which is indicative of an unusually tight residential property market. To put that number into context, a 1.2% national vacancy rate translates into only 35,425 vacant dwellings across the entire country. With around 400,000 net immigrants arriving in 2022-23 and over 315,000 expected to arrive 2023-24, as well as natural population growth of over 125,000, 35,425 vacant rental dwellings represent an extreme undersupply of residential property versus expected demand.
More renters want to buy
The implications for the outlook for Australian property are significant. You just need to ask most renters how they’re planning to navigate rising rentals and the associated cash-flow stress. It won’t surprise you to hear a growing number of renters are planning to buy property as soon as they’ve saved a deposit and can access the required funding.
Optimistic property outlook
When you consider this growing population of potential property buyers is in addition to the expected buying from incoming immigrants, as well as growing interest from Chinese property investors, the current low vacancy rate spells one thing for Aussie property investors… a optimistic outlook for residential property prices. With such a pronounced undersupply of residential property, it’s likely that property prices will continue increasing in both the short and long term.
The North-West Sydney opportunity
The situation in North-West Sydney is reflective of similar trends. For example, Rouse Hill and Norwest’s rental vacancy rates fell to 1.6% in August as more renters have moved into the region to benefit from the lifestyle advantages on offer. The opportunity for property buyers to purchase land or house and land packages in this up and coming region within the high demand Sydney market has rarely been more compelling versus the alternatives.
Check out Landen’s property opportunities if you’d like to position yourself ahead of the next upward move in North-West Sydney property prices.