The
Gold Coast has stolen the spotlight for the December quarter vacancy
rate report, with a jump in the vacancy rate from 1.7 per cent to 4.8
per cent.
Several projects have completed and
added to the rental pool. The largest of these is JLL’s Smith
Collective build-to-rent dwellings. The precinct has around 1251
dwellings, with first tenants moving in last month.
Other
developments have come online in Varsity, Broadbeach, Miami, Burleigh
and Robina. Agents are indicating that the market is price sensitive
and tenants have choice, conditions that are relatively new to this
market.
The inner Brisbane market also reported a rise in vacancies, a lift from 2.1 per cent to 4.0 per cent in the December quarter. While this may seem a big jump, it’s actually not unusual for this market in the December quarter. The 0-5km ring empties of renters in the Christmas/early January period and vacancies rise. This is an almost-decade long pattern of higher vacancies in December followed by a fall in the March quarter as the market returns to business as usual.
Rental conditions remain steady for December
Brisbane’s
middle ring (5-20km) held rock steady at 2.0 per cent from September
to the December quarter. This closes out a very stable year for this
region. In December 2017 the middle ring was 2.1 per cent, before it
bumped up to 2.8 per cent in the March quarter. The June and
September quarters were 2.1 per cent and 2.0 per cent respectively.
The market forces of supply and demand are well balanced in this
section of the market.
Brisbane LGA eased by 0.5
per cent, moving from a tight 2.0 per cent closer to a healthy
ranking of 2.5 per cent. For most of 2017 this market averaged around
3.0 per cent to 3.5 per cent. Throughout 2018 it tightened a little
as the more affordable middle ring lured tenants away from the
central suburbs. But as supply to the inner city apartment market
slows, it’s possible we’ll start to see this market tighten again
over the coming year.
The Greater Brisbane region
tightened from 2.4 per cent to 2.3 per cent.
Logan tightened from 3.5 per cent to 2. 4 per cent. This market has moved from healthy into tight and, similar to Ipswich, is partially feeling the impact of population growth. From 2011 to 2016, the population of Logan grew by more than 25,000, or the equivalent of more than 5,000 people a year. With many regions reporting muted investor activity this population growth will push vacancy rates lower.
Headwinds
Affecting the Queensland Rental Market:
A
combination of factors is triggering investor nervousness in the
Queensland rental market and we are seeing a slowdown in investor
activity.
Local agents in pockets of the southeast
corner are reporting falling sales volumes, attributable to the
perfect storm of real estate headwinds of tightened lending criteria,
the legislation review, and the pending federal election.
As
federal election campaigning begins to ramp up uncertainty around
potential negative gearing adjustments and capital gains tax changes
have caused many investors to hit pause on possible buying
activity.
The REIQ is hearing from agents that
financing is causing contracts to fall over. We’re seeing tightened
lending restrictions slowing both investors and first home buyers
from getting into the market.
The State
Government’s ongoing review of the Residential Tenancies and
Rooming Accommodation Act is adding to the unease, particularly given
the types of changes introduced in Victoria following a similar
review of its rental legislation. Investors are concerned about a
loss of control over their asset and worry about unwieldy legislation
that will reduce their rights while ramping up concessions to
tenants.
Source: REIQ Media https://www.reiq.com/REIQ/Posts/Media/Gold_Coast_spike_in_December_vacancies.aspx
