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No relief for Queensland’s excessively tight rental market

Queensland is experiencing record low vacancy rates with most regions remaining much tighter than what the Real Estate Institute of Queensland (REIQ) classifies as ‘healthy’.

The REIQ’s Residential Vacancy Report revealed many areas across Queensland experienced very low vacancy rates in 2021 that were far below the ‘healthy’ average, which is between 2.6 per cent and 3.1.

In Maryborough, the vacancy rate hovered just above zero at 0.1 per cent, which proved a record low across the history of the report.

In the neighbouring region of Hervey Bay, vacancies were sitting at 1 per cent in the December 2021 quarter.

Meanwhile, Bundaberg (0.4 per cent) to its north and Gympie (0.3 per cent) to its south, also continued to feel the strain, remaining in incredibly tight territory.

In fact, of the 50 local government areas and sub regions reported on, the only areas that tipped into the ‘healthy’ range during 2021 were within Greater Brisbane, including Brisbane’s inner city, which was 2.8 per cent in the March quarter, followed by the Bay Islands which were 2.7 per cent in the December quarter.

The REIQ also noted there was little indication vacancy rates would move anytime soon.

Changes over the most recent September to December were mostly confined to a minimal 0.2 per cent up or down, with the exception of Burdekin (near Townsville) which rose by 0.4 per cent to 0.8 per cent, and Maroochy Coast and Hinterland which both tightened by -0.3 per cent to 0.4 per cent.

Queensland coastal tourism centres, including the Sunshine Coast (0.5 per cent), Caloundra Coast (0.6 per cent), Gold Coast (0.6 per cent), Fraser Coast (0.6 per cent), and Noosa (0.8 per cent) were still in high demand with vacancies showing little movement.

Along the state’s boundary with New South Wales, the Southern Downs region and the Goondiwindi region held some of the tightest vacancies at 0.2 per cent and 0.3 per cent respectively.

The REIQ reflected perhaps with “border bubble” residents, who used to move freely between the two states, were forced to choose a side.

Vacancies were tight right to the top of Queensland too, with the Tablelands (0.2 per cent) and Cook (0.4 per cent) both stagnant, while Mareeba (0.4 per cent) and Cairns (0.7 per cent) moved fractionally by 0.1 per cent.

“The regional centres of Rockhampton (0.4 per cent), Toowoomba (0.4 per cent), Mackay (0.7 per cent) and Townsville (0.7 per cent) all stayed relatively firm and tight too, ” the REIQ reported.

Meanwhile Gladstone is looking slightly better at 1.2 per cent but also tightened by 0.2 per cent from 1.4 per cent in the prior quarter.

REIQ Chief Executive Officer Antonia Mercorella said she couldn’t recall a time where tight vacancy rates were so consistently and drastically low across Queensland, citing COVID-19 as creating the unique behaviour.

“We’re experiencing the perfect storm of low housing supply levels, incredibly high interstate and intrastate migration particularly to our regions, longer length tenancies as tenants choose to stay put for greater security and certainty, and less shared tenancies as people want more space now they’re working from home,” Ms Mercorella said.

“A rental market as extraordinarily tight as this presents challenges to the local economy and to the community.

“We acknowledge that whilst current market conditions are favourable from an investor’s perspective, no one wants to see people struggling to find a place to live, forced into unsuitable housing (such as big families crammed in studio apartments), or living unsustainably outside of their means.”

Ms Mercorella said the REIQ’s expectation is that 2022 will bring more of the same competition and more needs to be done to relieve pressure on the rental market.

“Demand for rental properties in Queensland will continue to rise along with the rising population and that growing population needs a roof over its head,” Ms Mercorella said.

“With international borders opening, over time we’ll see returning numbers of international students, migrants, and holidaymakers, and this too will add to the strain on rental accommodation.

“Regional areas growing due to new employment prospects will also need to find housing solutions to take advantage of the economic boost a rising population could deliver.

“For example, Maryborough’s train manufacturing contract is set to support up to 800 jobs over the next decade in the region, but with vacancy sitting at 0.1 per cent, where these workers will live is puzzling.

“Queensland needs additional housing supply to ease these tight conditions and accommodate the masses relocating to the state, and this supply simply can’t come soon enough.”

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