Low vacancy rates, high house prices and a predicted surge in rental growth is excellent news for those considering an investment property.

[Investment properties] are hot property in Sydney at the moment. At one point we had a four percent vacancy rate and now it’s down to below two percent, Carol Leddon, sales consultant for Sarah Lorden Real Estate in Balmain, says.

People are renting in Sydney because it is the city of Australia. It definitely holds its own.

Places that are cushioned by water are definitely hot spots because they have hubs and beaches which are in proximity to a lot of activity.

According to Toula Kavich, marketing manager at Annandale’s Callagher Estate Agency, there are plenty of quality tenants but not enough property.

The demand for rentals is huge -“ our office is down to a 0.05 percent vacancy rate. Properties are being leased within a week and the traditional Saturday open house is going out the window, Kavich says.

The recent interest rate rise meant people who were about to buy are holding off and renting instead, choosing to see what happens to the market in the next year.

BIS Shrapnel’s Residential Property Prospects Report, released on Monday, has already predicted what the future holds for Sydney rentals.

Rental growth is set to accelerate over the next three years, the report says. Rental growth of 10 percent per annum could easily occur in Sydney.

Investors will also be pleased at the news that some agents are encouraging clients to gazump one another in rental bidding wars.

We’ve introduced a system of rent ranging where prospective tenants -˜bid’ against one another to determine the final rental price, marketing manager Kavich says.

It’s great from a landlord’s perspective because rent ranging secures the best possible price for them in today’s competitive market and works well whether the market is up or down.

We advise tenants to provide a high bid and the majority of properties we’ve leased this way have leased at the top end of the enquiry range.

If you’re yet to buy your investment package, then Kavich says to keep an eye on one type in particular.

Larger three- to four-bedroom homes are in high demand and are completely snapped up as soon as they’re put out there.

Younger families are moving back into the inner-city areas and eating up the market.

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