The Sunshine State’s rental market remains incredibly tight despite a slight uptick in vacancy levels during the December quarter, a new report from the Real Estate Institute of Queensland shows.
Queensland’s vacancy rate rose from 0.6 per cent in the September quarter to 0.8 per cent, according to the latest REIQ Residential Vacancy Rate Report.
Of the 50 local government areas and sub regions monitored in the report, 43 recorded an increase in their vacancy rate, while the remaining seven markets were unchanged from the September quarter.
“Promising as this news may seem, we’re taking it with a grain of salt until we see if this is uplift is here to stay or if it’s merely a seasonal fluctuation,” Ms Mercorella said.
“Tiny movements, however hopeful, should not be overanalysed. What this essentially means is the market is holding tight, and only time will tell if a trend is emerging.
“An influx of rental property changeovers at the end of the year is certainly not a new phenomenon, and the past decade of vacancy rates reveals patterns of generally higher vacancies in December.”
Ms Mercorella said there had been anecdotal evidence from the property industry that a larger than usual number of renters were choosing to stay in their current rental rather than try and secure another property in the current market.
“However, the REIQ is hearing from property managers that there is noticeably less exit and entry activity than usual, as there’s still plenty of tenants that are staying put and choosing to renew their lease rather than compete for a new place,” she said.
The REIQ regards a vacancy rate of 2.5 per cent or less as indicative of a tight rental market.
“Even with this small improvement in rates, let’s not forget that we’re still talking about incredibly low vacancy figures, which tells us there’s nowhere near enough rental properties to meet demand, and tough conditions continue for tenants,” she said.
Little change expected for vacancy rates in 2023
Ms Mercorella said strong population growth meant there was unlikely to be much relief for Queensland renters in 2023.
“Our state will continue to feel the impact of population growth with very strong interstate migration as well international migration including students set to return in force to the southeast corner,” she said.
“This increased demand will continue to apply pressure to an already strained rental market.
More housing supply is desperately needed for Queensland’s vacancy rate to ease, Ms Mercorella said.
“Queensland is crying out for additional housing supply to ease the tight conditions, but building costs and planning red tape are putting the brakes on new construction, while higher costs, more challenging lending conditions, and reduced legislative rights are deterring vital private property investment,” she said.
Vacancy rates as low as 0.2 per cent
Redland’s Bay Islands recorded the largest uptick in vacancies, increasing by 1.8 per cent to sit at six per cent.
Other areas to record a substantial increase in vacancies were Isaac (up 1.7 per cent), Gladstone (up 1.6 per cent), Mount Isa (up 1.1 per cent), Burdekin (up 1.1 per cent), Hervey Bay (up 1.1 per cent), Mackay (up 1 per cent), Townsville (up 1 per cent), Central Highlands (up 0.9 per cent), Fraser Coast (up 0.9 per cent), Maranoa (up 0.9 per cent) and Lockyer Valley (up 0.8 per cent).
Vacancy rates on the Gold Coast and Sunshine Coast inched up 0.1 per cent each to sit at 0.7 per cent.
Rates remained unchanged for the Caloundra Coast (0.7 per cent), Maroochy Coast (0.4 per cent) and Sunshine Coast Hinterland (0.4 per cent).
The areas with the tightest vacancy rate were the Southern Downs (0.2 per cent), Cook (0.3 per cent), Goondiwindi (0.3 per cent) and Tablelands (0.3 per cent).