Published : 1 December 2015
The Real Estate Institute of Queensland has just released some interesting information on the state's rental market, which will be good news for investors.
Vacancy rate data for September reveals the Queensland property market is basically operating at two speeds, with rates remaining tight in the South East corner and rates holding steady, albeit weaker, in the regions.
The rental markets from Gympie south to the Gold Coast and west to Toowoomba are largely at almost historically tight levels, with some parts of the Sunshine Coast registering less than one per cent vacancy.
Demand is rising and, with limited stock, that makes the market very tight, particularly around the Sunshine Coast suburbs of Noosa and Caloundra, with both areas registering 0.9 per cent vacancy rate – the lowest in the state.
REIQ CEO Antonia Mercorella said: “We’re seeing strong demand for rental properties in these areas and while a small level of this demand is seasonal, it does mean good news for investors who have certainty around finding tenants for their properties.”
Brisbane continues its long-term trend with a vacancy rate of 2.8 per cent, still a sound position for investors.
“We continue to see strong demand for dwellings in the Brisbane market and despite some commentators who suggest that we are facing a glut the data tells a different story,” Ms Mercorella said.
“New apartments in Brisbane are reportedly being snapped up by investors and owner-occupiers, although the vacancy rate softened slightly, from 3.0 per cent to 3.3 per cent.
“Asking rental prices are also said to be softening in response to the level of supply, however it is evident that the tenant demand is still there.”
The Gold Coast dropped from 2.3 per cent to 1.7 per cent, while the greater Sunshine Coast area recorded a drop from 1.6 per cent to 1.3 per cent.
The Fraser Coast recorded a small dip from 3.8 per cent to 3.7 per cent, reflecting a trend towards a healthier investor market.
Likewise, the news was good in Toowoomba as the vacancy rate dropped from 3.1 per cent to 2.7 per cent. This reflects the strength of the region and the diversity of its local economy. Improving employment prospects are adding to local confidence with the second range crossing scheduled to begin construction in 2016. Regular international freight flights out of the Brisbane West airport is also expected in the not so distant future.
Further north, the market is softer, with Gladstone recording a weakening in its vacancy rate. Gladstone’s vacancy rate lifted from 5.2 per cent to 7.1 per cent.
Ms Mercorella said the market in Gladstone was facing challenges but with promised infrastructure projects emerging on the horizon a recovery was likely.
“With potential projects slated to go ahead, such as the Eden Bann Weir scheduled for next year and the Gladstone to Fitzroy River pipeline, employment should improve and with that, the property market.”
Further north, Rockhampton data revealed a steadily improving picture with the vacancy rate moving from 6.0 per cent to 4.5 per cent.
Mackay’s vacancy rate held steady at 9.1 per cent for a second consecutive quarter and local agents report that despite the somewhat high vacancy levels, a small level of optimism was returning to the market as employment prospects firmed.
“We are hearing that tenants are taking longer leases in response to better employment certainty and while it would be premature to suggest a turnaround was imminent we are confident in our position that the bottom has been reached,” Ms Mercorella said.
In the state’s north, Townsville held relatively steady at 5.6 per cent, up marginally from 5.3 per cent.
Cairns was one of the best performing regional centres, with a drop from 2.7 per cent to 2.6 per cent, reflecting continued employment and improvements in the tourism market.
Ms Mercorella said that overall Queensland’s market was in a relatively solid position, compared with other states.
“The southeast corner is driving growth and this will eventually cascade throughout the rest of the state,” she said.
“We’re hearing that business confidence is improving in some regional centres as those economies diversify and manage the resources downturn impact.
“In Brisbane, consistently strong capital growth for the past two years gives us reason to be optimistic that equilibrium will be restored in the rest of the state,” she said.