Rental Market is Facing Tight Conditions
According to the latest REIQ rental vacancy report, 70 per cent of Queensland’s rental market is experiencing the tightest conditions since the Global Financial Crisis (GFC), making it nearly impossible for some tenants to find a rental property in certain locations.
The rental sector plays a crucial role in Queensland’s property market as 36 per cent or 1.2 million people in Queensland rent their home but further tightening of vacancy rates will create more pressure on the housing market.
Cities & towns experiencing the tightest conditions include Maryborough (0.4 per cent), Mount Isa (0.5 per cent), Rockhampton (0.7 per cent), Gympie (0.9 per cent), Fraser Coast 1.2 per cent), Mackay (1.3 per cent), and Townsville (1.7 per cent).
More locally in SEQ, Caboolture, which is located in between Brisbane and Sunshine Coast, has a vacancy rate of just 1.2 per cent, with an average weekly rent price of $330 for a house and a median house price of $345,000.
The Sunshine Coast also continues to deliver one of the strongest property markets in Australia, with a vacancy rate of 1.9 per cent and consistent property and rental prices.
Comparatively, the current median vacancy rate in Brisbane is 3.9 per cent, however each individual suburb's vacancy rate can vary substantially.
For example, Brisbane's city centre currently has a vacancy rate of 13 per cent, which is the lowest it’s been since the GFC in 2008. Nearby Bowen Hills, Fortitude Valley, Herston, and Newstead all sit at 7.9 per cent.
These numbers aren't surpising when you consider these suburbs are predominately occupied by university students who have either moved home to their parent's house or had to return overseas due to the current COVID19 pandemic.
Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said the Brisbane CBD rental market had been hit harder due to the high number of renters facing financial stress due to change or loss of employment, a reduction in international tertiary students as well as permanent and temporary migrants, and a significant shift in short-term lets over to the longer-term rental market.
“It’s therefore likely we’ll see rents drop in the inner Brisbane areas which in turn will result in tenants eventually returning to the city,” Ms Mercorella explained.
“However, much of it will also depend on the commercial and retail sector’s ability to rebound. It’s very much a ‘watch this space’ situation unlike anything we’ve ever experienced,” she noted.
“It’s no surprise that we’ve seen a shift in our state’s rental composition to more affordable rental supplies in outer urban and regional areas during COVID-19.
“On the plus side it helps break up their mono-tenure and supports more local economies to withstand the pressures of the pandemic we’re witnessing in our larger cities.
"Investors are encouraged to take a long-term view of an area’s vacancy rates. You’re not buying into a city, you’re buying into a suburb,” Ms Mercorella added.
“So you need to understand that particular suburb’s vacancy rate now – and also in the future.”
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