Queensland’s rental market continues to be in drastic conditions for tenants as vacancy rates remain stuck way below levels considered “healthy”.
Figures from the Real Estate Institute of Queensland (REIQ) show the state’s anaemic rental supply, with vacancy rates in Brisbane Local Government Area (LGA) reaching a new low of just 0.8% during the second quarter of the year.
Vacancy rates below 2.5% indicate a tight market. Rental markets with vacancies of 2.6% to 3.5% show a balance between supply and demand.
Inner-city suburbs had a vacancy rate of just 1%, reflecting a 0.5 percentage point decline in the quarter.
Outer Brisbane regions of Logan LGA, Moreton Bay LGA, and the Pine Rivers Shire posted even lower vacancy rates, down by as much as 0.4%.
Interestingly, some regions, particularly on the coasts, were able to report an upside in vacancies albeit only marginal. Noosa, Caloundra Coast, and Sunshine Coast witnessed an uptick in vacancy levels during the quarter but remained in unhealthy territory.
Other tourism centres like the Gold Coast, Maroochy Coast, Hinterland, and the Whitsundays maintained their tight vacancy rates.
Of all regions in Queensland, Goondiwindi and Southern Downs are the tightest as vacant rental properties are close to impossible to find, with their vacancy rates at 0.1%.
The only healthy rental market in the state is Redland’s Bay Island, which posted a quarterly vacancy rate of 3.2%.
Low vacancies taking a toll
REIQ CEO Antonia Mercorella said the tight conditions in the rental market are already having both social and economic ramifications.
“Real estate agents in regional parts of Queensland have reported that incredibly tight vacancy rates are making it tough for hospital workers, teaching staff, and students to find a place to live in proximity to their essential work or study,” she said.
“These people bring skills and spending to the regions, all contributing to the economic prosperity and social fabric of the area, and it’s a truly concerning loss to these communities when they simply cannot house them.”
Ms Mercorella said the fact that Brisbane’s rental market became even tighter over the past quarter reflects how depleted the supply is in the capital city.
“Typically, inner-city apartment supply is more bountiful and keeps Brisbane’s vacancy rate quite buoyant, but what we’re seeing now is that even this market is being filled to the brim,” she said.
Meanwhile, Ms Mercorella said the slight ease felt in some coastal areas was perplexing, and it would be interesting to see where vacancies would go in these areas over the remaining months of 2022.
“Given we’ve seen a lot of properties in prime locations change hands off the back of very strong sales conditions, perhaps some of these are now coming on to the market as rentals,” she said.
New rental laws’ impact
Ms Mercorella said the new set of rental policies in Queensland that are set to come into effect by October could potentially trigger a ripple effect on property investors and the overall rental market.
“While some property investors may have made the decision to sell in anticipation of the new laws being introduced, it’s concerning to think what the aftermath could be once the laws are in operation,” she said.
Aus Property Professionals director and author of Buy Now Lloyd Edge said while the full force of the changes will take be felt over the next financial year, investors would start to consider diversifying their portfolio out of Queensland.
“It will be advantageous for investors to hold a higher value of property in other states as this will reduce the total QLD land tax payable,” he told Your Investment Property.
“We would also expect to see an increase in property rent as investors will try to recoup their tax losses from rental income, which is most likely to significantly impact commercial properties over residential properties.”
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