Vacancy Rate
Returns & Analysis
The percentage of time a rental property is unoccupied and not generating income.
Full Explanation
Vacancy rate is measured as the number of vacant properties divided by the total rental stock in an area. A low vacancy rate (below 2%) indicates strong tenant demand and potential for rent increases. A high vacancy rate (above 4%) suggests an oversupply of rentals and downward pressure on rents. Investors should factor vacancy into their cash flow projections, typically allowing 2 to 4 weeks per year.
Example
An area has a vacancy rate of 1.2%, meaning only 1.2% of rental properties are empty at any time, signalling very strong tenant demand.
Frequently Asked Questions
Where can I find vacancy rate data?
SQM Research publishes monthly vacancy rate data for suburbs and cities across Australia. Domain and REA also publish quarterly rental market reports with vacancy trends.
How much vacancy should I budget for?
A common rule of thumb is 2 to 4 weeks per year (approximately 4 to 8%). In areas with very low vacancy rates, you might budget less, but it is prudent to have a buffer for tenant changeovers and any maintenance between tenancies.