What is a Vacancy Rate?

If you’ve been searching for a rental lately, you’ve probably felt the heat of Australia’s rental crisis – low availability, skyrocketing prices, and dozens of hopeful tenants at every inspection. A key number behind all this chaos is the vacancy rate. But what exactly is it, and why does it matter?

Vacancy rate is the percentage of rental properties that are currently unoccupied and available for lease.

Vacancy Rate Formula:

Vacancy Rate (%) = (Vacant Rental Properties / Total Rental Properties) × 100

For example, if a city has 1,000 vacant rentals but a total of 50,000 rental properties, the vacancy rate would be:

(1,000 / 50,000) × 100 = 2%

It’s a crucial indicator of how tight (or relaxed) the rental market is. A balanced market usually has a vacancy rate of around 3%, meaning there are enough vacant rentals to give tenants some choice while keeping prices stable. But when that number drops below 2%, it’s a different story – competition gets fierce, landlords have the upper hand, and rents start climbing fast. Right now, many Australian cities are seeing vacancy rates at historic lows – some under 1%! That’s why finding a rental feels like winning the lottery.

Imagine walking into a rental inspection five years ago – maybe there were a handful of other applicants, and you had time to think before signing. Now? You’re up against dozens of people, all armed with glowing references and rental resumes, ready to offer above the asking price just to get their foot in the door. That’s what a low vacancy rate does – it turns renting into a high-stakes competition.

So, next time you hear the term vacancy rate, know that it’s more than just a statistic. It’s the difference between having choices and scrambling to find a place to live. And right now, for many renters, it’s at crisis levels.

Looking for ways to navigate the tough market? Check out our latest insights or read this report on what’s driving Australia’s rental crunch.