Australian property investors are currently revelling in experiencing extremely low vacancy rates, a trend not predicted to change any time soon. According to prominent property research firm, SQM Research, the national vacancy rate in July 2023 was just 1.3%, indicating scarce unoccupied rental properties. 

This shortage creates an advantageous environment for investors as they encounter minimal challenges in finding tenants, and renters are often willing to pay higher rents to secure accommodation.

A Persisting Rental Shortage Problem

SQM’s Managing Director, Louis Christopher, emphasised the ongoing severity of the rental shortage situation across the country. Citing the lack of any substantial solution in sight, he pointed out that the customs of individuals housing together to share the living expenses does little to mitigate the issue. 

“Clearly, acute rental shortages remain with us. And besides more people grouping together to share the burden, there is no significant solution on the horizon,” said Christopher. Therefore, the tight rental market that has driven up the rents, coupled with the persisting rental shortage, indicates that for property investors, the market offers viable opportunities for increased returns.

Population Growth Driving the Rental Market

Christopher identified burgeoning population growth as the primary reason behind the tight rental market and rapidly increasing rents. Australia currently leads as the country with the fastest-growing population among OECD countries. This unprecedented growth rate is outpacing the nation’s capacity to accommodate everyone adequately, further exacerbating the rental shortage issue. 

“Australia currently has, by far, the fastest growing population for any OECD country and clearly the rampant increases are currently breaching the country’s capacity to house all our people,” Christopher said. This soaring demographic growth has been instrumental in the surge of the real estate investor market, promising increased returns on investment due to higher rents and lower vacancy rates.

Implications for Property Investors and Renters

For property investors, this presents a promising landscape for capitalising on their investments. The scarcity of vacant rental properties makes it easier to obtain tenants, and the demand allows for increased rents. Furthermore, the persistent rental shortage and rapid population expansion signal the long-term sustainability of these high returns.

However, for renters, this reality paints a challenging picture. High rents and limited available properties make the housing market increasingly inaccessible. The potential exacerbation of this problem calls for strategic solutions – potentially government intervention or initiatives to boost the housing supply.

The current Australian property market, characterised by low vacancy rates and high rents, offers significant opportunities for property investors. Contact us at Peel Finance Brokers to find the right mortgage option and begin your investment journey.

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