What Do Toowoomba’s Low Vacancy Rates Really Mean?
You might have heard that vacancy rates in rental properties in Toowoomba are super low right now.
But what does that really mean? We take a look at what the vacancy rate measures, how Toowoomba’s vacancy rates compare to those in the rest of the state, and what low vacancy rates mean for property investors and tenants.
What does ‘vacancy rate’ mean?
The vacancy rate is a measure of how many rental properties in a given location or market are currently unleased, or without tenants renting them. It is calculated by dividing the number of vacant rental properties in the area by the total number of rental properties and then recording the result as a percentage. For example, if there are 1000 properties in the area and 25 of them are vacant, the vacancy rate would be 2.5 per cent.
Property data groups usually calculate vacancy rates monthly, so a property usually needs to be vacant for a few weeks to be counted in the statistics.
What is the vacancy rate in Toowoomba right now?
In good news for Toowoomba property investors, the vacancy rate in Toowoomba in February 2021 was just 0.6 per cent. To put that figure in context, a vacancy rate of around three per cent is considered a “neutral” rental market.
In February 2021, the national vacancy rate across the whole country was 2.0 per cent, and Brisbane’s vacancy rate was 1.4 per cent, down 0.2 per cent from January and 0.7 per cent from February 2020.
Toowoomba’s low vacancy rate is reflective of the trend sweeping across regional Queensland, with 90 per cent of the state’s regional areas recording an all-time low median vacancy rate of just 0.575% in February 2021. State government measures designed to keep tenants in place for longer during the pandemic and significant interstate migration are two of the driving factors behind regional Queensland’s current tight vacancy rates.
This is the lowest vacancy rate we’ve seen in Toowoomba since May 2010, when it dipped as low as 0.4 per cent. Since then, the highest it has reached was 4.2 per cent in both January and December 2016.
What happens when the vacancy rate is very low?
A very low vacancy rate, considered to be anything under two per cent, indicates strong rental demand. With a high number of tenants searching for a new home compared to the number of properties available, there is stiffer competition for the rental properties on the market. This leads to what’s known as a landlord’s market, where property investors have the upper hand. In such a market landlords can be more selective about their tenants, and rents often rise.
What does a low vacancy rate mean for property investors and tenants?
A low vacancy rate means greater appeal and security for property investors, as they are more likely to avoid long periods without a tenant. Being able to replace a tenant quickly after they move out means a better rental yield and a constant income for landlords.
Demand from the rental market, demonstrated by low vacancy rates, is a sign that an area is a desirable place to live. If the vacancy rate stays low for a while, rents will be driven up, and the area becomes attractive to property investors looking to see a return on their investment. If more investors buy into the area, sales prices can rise and then all property in the area experiences capital growth.
When vacancy rates are low, like they are now, and competition for rental properties is stiff, would-be renters need to be ready to act. Have your references and finance lined up and ready to go, so as soon as you find your dream property you can make your move.
If you’re looking for a property manager for your Toowoomba investment property, contact our experienced team today.