Many regional areas around the country are facing extremely low vacancy rates among rental properties, and this is starting to push rental rates up in these locations. If this trend continues, you may want to crunch the numbers on renting vs. buying and consider becoming a homeowner.
A balanced vacancy rate is typically between 2% and 3%. Once vacancies drop below 2%*, it usually means there’s an undersupply of properties available and rents will start to rise.
Out of 52 major towns and cities in Australia, 39 of them (or 75% of the country) have an undersupply of rental properties, with vacancy rates below 2%. Many locations are even experiencing vacancy rates at 1% or below, including:
– WA (Port Hedland, Karratha, Esperance, Albany, Busselton and Margaret River)
– NT (Darwin, Katherine, Alice Springs)
– QLD (Mt Isa, Toowoomba, Townsville, Mackay, Rockhampton, Bundaberg)
– NSW (Coffs Harbour, Port Macquarie, Dubbo)
– VIC (Warrnambool, Griffith, Mildura)
– TAS (Burnie, Hobart)
– SA (Whyalla, Adelaide)
It is highly likely that rental rates could rise significantly in these areas; the lower the vacancy, the more upwards pressure on rates.
Renting vs. buying
When rental rates start climbing, there will be a tipping point at which buying your home might become a better financial decision, particularly when you factor in the multitude of government assistance measures available for First Home Buyers and the extremely low cost of borrowing. Interest rates are forecast to remain very low for the foreseeable future.
There are, of course, many other considerations as to whether it’s time to purchase a home – future price growth, the stability of income, and a sufficient deposit, among others. Nevertheless, seeking assistance from a Financial Broker to compare the costs and benefits of renting vs. buying is suggested, so you can make an informed financial decision about when is a good time to buy.