Rental Vacancy Rates
SQM Research has revealed vacancy rates in Brisbane vacancy rose from 0.8% to 1.1% in December. Vacancy rates in Brisbane’s CBD rose from 1.4% to 1.8%.
Rents
Over the past 30 days, Brisbane’s asking rents increased by 1.7%.
SQM Research attributes the increase in vacancy to seasonal factors such as international and final year university students finishing their tenancies. However, the rental market is still expected to remain tight over the months of January, February, and March 2023 for most capital cities.
Louis Christopher, Managing Director at SQM Research states: “At this stage asking rents are still surging ahead. We are just not seeing any relief on rents present. However, I remain hopeful later in 2023 we will see some type of stabilisation in the rental market once we see higher completion rates and a slowdown in housing formation. On the flip side, the surge in rents is pushing up rental yields, especially with falling prices. I believe ‘would-be’ investors will be attracted to higher rental yields in later 2023, once we see a pause in cash rates.”
Property Value
The CoreLogic Research team has released its latest Monthly Housing Chart Pack:
Brisbane dwelling values are now -9.4% below the recorded June 2022 high.
In capital cities, the monthly pace of decline increased through December. December saw national home values decline -1.1%, which was steeper than the 1.0% fall in November, but still below the peak monthly decline (-1.6%) recorded in August.
The main force behind record home value falls is the recent cycle of rate hikes.
Higher inflationary pressures, combined with a post-lockdown surge in spending has also eroded household savings, which could be utilised for a home loan deposit.
Softer housing demand may also reflect Australia’s ‘hangover’ from the elevated sales and listings activity through the 2021 boom.
Experts Forecast
Over the coming months, housing market conditions are expected to remain soft.
Savvy property investors are likely to re-enter the market in 2023 after a year in which many quit because of fast-rising interest rates and high prices, experts predict.
With the majority of cash rate hikes now likely behind us, as well as declining prices, high rents, tight vacancy rates and the return of migration, the market will have all the right essentials to attract investors.
“Maybe we won’t see them in as high numbers as in the past just yet,” said Domain chief of research and economics Dr Nicola Powell. “But I do think the strategic investor who isn’t fearful of purchasing in a downturn and has an eye on the fundamentals of the housing market and an understanding of the dynamics will be back.”
Sources:
SQM Research. (2023). National Vacancy Rate December 2022. https://sqmresearch.com.au/16_1_23_National_Vacancy_Rate_December_2022_FINAL.pdf.
CoreLogic Research. (2023). Monthly Housing Chart Pack January 2023
CoreLogic Research. (2023). Australian home values officially record the largest decline on record : Australian home values officially record the largest decline on record | CoreLogic Australia
Property Investment Professionals of Australia. (2023). Is this year a good time to buy an investment property? Is this year a good time to buy an investment property? – Property Investment Professionals of Australia – PIPA
