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REIQ: Rental market facing “tightest conditions since GFC”

Seventy per cent of Queensland’s rental market currently faces tight conditions, according to the latest quarterly rental vacancy rate report.

Eighteen per cent of Queensland regions are experiencing less than 1 per cent vacancy at present, with areas like Maryborough (0.4 per cent), Mount Isa (0.5 per cent), Rockhampton (0.7 per cent), and Gympie (0.9 per cent) close to impossible to find rentals in.

Regions such as Caboolture (1.2 per cent), Fraser Coast (1.2 per cent), Mackay (1.3 per cent), Sunshine Coast (1.9 per cent) and Townsville (1.7 per cent) are only faring marginally better, sitting well under 2 per cent vacancy rates.

Thirty-six per cent of Queensland’s population currently rent their home – making this a market of approximately 1.2 million Queenslanders.

“Every Queenslander should have access to a safe, secure and affordable home that meets their needs and supports them to participate in the social and economic life of a vibrant and prosperous state,” Real Estate Institute of Queensland (REIQ) CEO, Antonia Mercorella said.

“The rental sector plays a critical role in Queensland’s housing system and the role and size of our investor market has never been so important.

“Any further tightening in rental availability levels will only place additional undue pressures on our housing sector, which is why more needs to be done to better support both increased and ongoing property investor activity in the Queensland property market and the contributions they make to the state economy.”

Inside Brisbane’s 5km city circle the mean vacancy is 3.9 per cent, yet this figure is deceiving. The postcode 4000 has vacancy levels at 13 per cent, while nearby suburbs Bowen Hills, Fortitude Valley, Herston, and Newstead sit at 7.9 per cent.

“In Brisbane CBD we know the rental market has been hit harder due to the high number of renters facing financial stress due to change or loss of employment, a reduction in international tertiary students as well as permanent and temporary migrants, and a significant shift in short-term lets over to the longer-term rental market,” Ms Mercorella explained.

“It’s therefore likely we’ll see rents drop in the inner Brisbane areas which in turn will result in tenants eventually returning to the city.

“However, much of it will also depend on the commercial and retail sector’s ability to rebound. It’s very much a ‘watch this space’ situation unlike anything we’ve ever experienced,” she noted.

“It’s no surprise that we’ve seen a shift in our state’s rental composition to more affordable rental supplies in outer urban and regional areas during COVID-19.

“On the plus side it helps break up their mono-tenure and supports more local economies to withstand the pressures of the pandemic we’re witnessing in our larger cities,” Ms Mercorella said.

“However, such limited rental supplies have the potential to result in poorly matched housing preferences and impact the urban spatial structure and functioning of these same regions – such as transport costs, labour markets and access to services and amenities.

“It also shows that there’s a decline in government investment in social housing with more low-income renters in the market.”

Investors are encouraged to take a long-term view of an area’s vacancy rates.

“You’re not buying into a city, you’re buying into a suburb,” Ms Mercorella explained, “so you need to understand that particular suburb’s vacancy rate now – and in the future.”

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