Vacancy rates 'likely to tighten' in Sydney

While rental conditions eased slightly for tenants in the NSW capital, vacancy rates continue to remain tight right across the city, particularly in the inner suburbs.

New figures published today (January 20) by the Real Estate Institute of New South Wales (REINSW) showed a slight rise in overall vacancy rates for the first time in more than three months.

But according to the REINSW, this moderate increase could be a seasonal variation and may not reflect long-term change.

In the Sydney inner suburbs - located within ten kilometres of the central business district - vacancy rates increased to 1.5 per cent between November and December 2011, while the middle suburbs saw rates rise to two per cent.

Demand also continues to be strong in Sydney's outer suburbs, with REINSW data showing that vacancy rates now stand at 1.4 per cent in areas located at least 25 km from the CBD.

Tighter vacancy rates, according to REINSW president Christian Payne, are expected to occur within the first quarter of 2012.

He explained: "The new year traditionally signals an increase in demand for rental properties across the board."

Conditions, he warned, are likely to become tighter for renters in the coming months - although this could be seen as good news for those considering a Sydney property investment.

Payne added: "The already low levels of available rental properties are likely to be squeezed even further as people return to work and schools and universities resume for the academic year."

In fact, vacancy rates are tight right across the state - in Newcastle, they stood at 1.1 per cent in December, while rates in the Illawarra region were recorded at 1.6 per cent - the same figure as the Central Coast.

Anyone considering a Sydney property investment may be further encouraged by recent economic forecasts, which suggest that another cut to the cash rate could be made in February, when the Reserve Bank of Australia has its first meeting of 2012.

Loan Market chief operating officer Dean Rushton said earlier this week that another rate cut could help to foster consumer confidence, which could lead to a growing number of home loan approvals in the coming months.

He pointed out that in New South Wales, demand from first homebuyers was significantly high right before Christmas, as many rushed to cash in on the stamp duty exemption before the 2011 deadline.

Posted by Grace Neale