Five of the top 10 areas with the lowest rental vacancy rates in 2018 were in Tasmania where the market has been holding up in recent years. Three areas in the top 10 were in Canberra, one Queensland and the other in the Northern Territory, according to figures from SQM Research.
Renters in Tasmania are having the hardest time looking for a dwelling, but the low rental vacancy rates should not be enough to woo investors, according to a report by The New Daily.
“Tasmania has a low vacancy rate, but I think that is set to change because in the last few years it has attracted a lot of investor interest, maybe too much. It’s had a lot of growth, and that’s been underpinned not by locals, but investors from interstate. For every five people that move to the state one job is created, so the fundamentals aren’t strong, because it has been so attractive. So I would expect vacancy rates to increase significantly,” Anna Porter, property advisor and principal of Suburbanite, told The New Daily.
Canberra also stood out on the list. “There is still a lot of transitional employment in Canberra, a lot of short- to medium-term job opportunities, and there is a shortage of rental shock. There just isn’t enough stock. We’re hearing stories of agents putting up sold stickers on places and people ringing that day to see if the property is going to be rented out,” Porter told The New Daily.
Investors have not given much attention to Canberra due to its land tax rates which are higher than most other states. The competition, though, counters the high tax, according to Porter.
Property Investment Professionals of Australia Chairman Peter Koulizos warned that vacancy rates are only one of the factors that investors should consider when purchasing property.
Capital-growth prospects, the strength and diversity of the local economy, supply and demand from buyers and renters, new construction which may negatively impact the market, and cash flow, must also weigh on investors’ decisions when buying properties.
An informed investor will expect the market to go through peaks and troughs, said Koulizos.
“That means they don’t easily get spooked by less than stellar data. Instead, they continue to treat their tenants well and with respect, so the chances of their properties becoming vacant are minimised,” he said.
Kay Rivera, Your Investment Property, 27 March 2019