Vacancy rate
The share of rental properties in an area sitting empty, used as a gauge of rental demand.
Vacancy rate measures available rentals as a percentage of total rental stock in a suburb or city. It is the most direct available signal of how tight a rental market is.
Below about 2% is generally considered a landlord's market, where properties let quickly and rents rise. Above roughly 3% favours tenants, with longer vacancies and pressure to discount.
For an investor, vacancy is a direct cost. Every week without a tenant is a week of interest, rates and insurance funded entirely from your own pocket with no offsetting rent.
What four weeks vacant costs
A property renting at $600 a week loses $2,400 in gross rent over a month of vacancy — and the mortgage, rates and insurance all continue regardless.
The bit people get wrong
A very low vacancy rate is not a guarantee for your specific property. Poor presentation, an ambitious asking rent, or an awkward floorplan will sit empty in even the tightest market.
Common questions
What is a healthy vacancy rate?
Around 2.5% to 3% is generally regarded as a balanced market. Much lower signals shortage and rising rents; much higher signals oversupply.
How should I budget for vacancy?
Most investors allow two to four weeks a year. Building that into your projections gives a far more realistic view than assuming 52 weeks of rent.
Where do I find vacancy data?
Property research firms and real estate industry bodies publish monthly vacancy rates by postcode and capital city. Local agents can also give a candid read on current conditions.