Gold Coast Vacancies Tighten as Rental Demand Rises
The REIQ Residential Vacancy Rate report for the September quarter has revealed that increased rental demand of about 1.1 per cent for the past quarter and 3.7 per cent for the past year has been a key contributor to the general tightening of vacancies throughout the state.
Queensland’s annual population growth of 1.7 per cent or about 83,330 new residents, (for the year to March 2018) has helped absorb about 6200 net new rental properties over the September quarter and more than 21,120 net new rental properties for the past year.
The numbers of residential bonds held by the RTA is increasing:
- 588,039 bonds held by the RTA in the 12 months to September 2018
- 581,833 bonds in the 12 months to June 2018
- 566,914 bonds in the 12 months to September 2017
Supply has also played a pivotal role in shaping the current state of the rental market. Tighter lending criteria and higher interest rates continue discouraging individual investors to enter the property market and limiting the increase in rental supply. This could potentially change if more new rental supply is released directly by developers into the rental market.
The Queensland rental market has strengthened again this quarter, reporting more tight markets and fewer weak markets compared to the previous quarter. In September 2018, Queensland reported 27 tight rental markets, four healthy markets and four weak markets compared to 24 tight markets, five healthy markets and seven weak markets for the June quarter.
Mackay has become the tightest rental market in Queensland as vacancies tightened to 0.9 per cent over the September quarter.
The Greater Brisbane rental market is tight, at 2.2 per cent. Within Greater Brisbane, Logan and Caboolture are the only markets that are in the healthy range, at 3.5 per cent and 2.8 per cent respectively.
The rental market in Brisbane LGA tightened for a second consecutive quarter, to 2.0 per cent in September. While property managers continue expressing concerns about oversupply of rental stock in the capital city, particularly for medium-to-high density dwellings, vacancies for both, inner Brisbane and Brisbane’s middle ring, have fallen to the tight range over the quarter.
The coastal rental markets, operated within the tight range with the consistently solid rental markets of the Gold Coast and Cairns tightened slightly this quarter, reaching 1.7 per cent and 1.4 per cent respectively.
The Fraser Coast and Cairns markets are the tightest coastal rental markets in Queensland with regional vacancies of 1.4 per cent.
Regional Queensland: The rental markets in the largest regional centres continued strengthening this quarter as median rents followed an upward trend, particularly in Gladstone, Mackay, Rockhampton and Toowoomba for the past year.
The key findings for the Queensland rental market for the September 2018 quarter are as follows:
- Brisbane LGA rental market strengthened and performed better for investors over the quarter.
- Vacancies tightened from 2.3 per cent in June 2018 to 2 per cent in September this year.
- Median rents for three-bedroom houses, two-bedroom units and three-bedroom townhouses each increased 2.4 per cent for the past year.
- Anecdotal evidence from property managers reveals that good property location is critical to maintain low vacancies as tenants continue favouring proximity to the city, public transport and amenities.
Greater Brisbane vacancies held steady at 2.2 per cent for the September quarter.
- Pine Rivers, in the Moreton Bay region, reported vacancies of 1.2 per cent over the September quarter, down from 1.4 per cent in June.
- The local government area of Redland reported one of Greater Brisbane’s tightest vacancies of 1.5 per cent as weekly median rents for a number of dwellings generally held steady for the past year.
- Logan vacancies eased from 1.9 per cent in June to 3.5 per cent in September as the market has seen an increase in new rental supply being released to the market.
- The rental markets in Ipswich and Moreton Bay continued operating within the tight range as tenants favour well-priced rentals in proximity to public transport.
GOLD COAST MARKETS
- The Gold Coast rental market has proven resilient to the increase of new rental stock and the fall in demand following the completion of the Commonwealth Games. As such, vacancies tightened, from 2 per cent in June to 1.7 per cent in September.
- Gold Coast property managers generally qualify the rental market as stable.
- Median rents for all dwelling types except one-bed units have trended upwards for the past year.
- The upcoming release of the Commonwealth Athletes Village to the rental market will add about 1200 apartments, or 1.6 per cent additional stock, to the market. This will likely help a little to ease the tight market conditions.
This is good news for our Property Investors who can continue to expect low vacancy rates and rising rental payments.