The March quarter vacancy rate data reveals generally improving rental markets across Queensland, according to REIQ’s Q1 2018 Vacancy Rate report, released today.
Regional Queensland, in particular, has delivered good results in the wake of a two or three bleak years.
REIQ CEO Antonia Mercorella said the regional vacancies improvements this quarter followed, broadly speaking, similar small improvements in 2017 Q4, and that these small but steady improvements were the hallmarks of Queensland real estate.
“Some of our markets, such as the Gold and Sunshine coasts, remain uncomfortably tight and we would like to see more investors enter those markets, however APRA’s tightened lending criteria is not encouraging investors to consider property. The result is tight markets remain tight, despite good opportunities for landlords in those markets,” she said.
Greater Brisbane’s vacancy rates eased by 0.1 per cent to 2.7 per cent, which remains a healthy market.
Looking more closely at this region, Brisbane LGA also eased 0.1 per cent to 3.1 per cent, which indicates a healthy market for a second consecutive quarter.
Zooming in closer, the inner ring (0-5km radius) tightened and returned from the weak range to a healthy 3.5 per cent. This is good news for this market as it reflects good rental options for tenants, and good opportunity for landlords to secure good tenants.
The middle ring (5-20km) eased slightly, moving from the tight to the healthy range and recording a vacancy rate of 2.8 per cent.
“It’s gratifying to see that all areas of the Brisbane rental market are operating in the healthy range and this start to impact speculation about oversupply,” Ms Mercorella said. “The data shows a very resilient market capable of absorbing the perceived oversupply.”
Ipswich tightened marginally, moving from 3.1 to 3.0 per cent, but has maintained its position as a healthy rental market.
“This area is really a growth corridor for Queensland and we’re seeing buyers and renters flocking to this part of the southeast corner. It’s great news that the rental market is maintaining its stability and healthy status,” Ms Mercorella said.
The Logan rental market eased 0.2 per cent to reach a still-tight 2 per cent vacancy rate. Historical trends put this market at around 2 per cent to 3 per cent, an indication that this market is operating business as usual.
Moreton Bay tightened by 0.2 per cent to 1.4 per cent. This market is generally a tight market and it is one of Queensland’s fastest growing regions.
Redland eased 0.2 per cent but remained tight, with a March vacancy rate of 2.4 per cent.
The Gold Coast held steady at 1.1 per cent. This market was measured in the lead-up to the Commonwealth Games and it will be interesting to see how the next two to three quarters shake out as visitors leave the region. Early next year, the Athletes Village will be redeveloped into a Health and Knowledge Precinct including mixed-use residential precincts with more than 1100 apartments.
“Our hope is that these units will find investor buyers and this could contribute to easing the tight rental conditions in this beautiful part of the world,” Ms Mercorella said.
The Sunshine Coast, overall, has a vacancy rate of 1 per cent. Caloundra, along with Gympie, has the tightest vacancy rate in Queensland, with just 0.5 per cent of properties vacant.
“The Sunshine Coast is very challenging for renters who are looking for accommodation and we have said consistently for quite some time that this market would benefit from additional investor activity. The upward pressure on rents, as a result of this tight vacancy rate, will serve to push this market towards unaffordable,” Ms Mercorella said.
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Noosa is also very tight, at just 0.8 per cent.
“It’s no surprise that renters are flocking to this market – it’s such a stunning part of the world with employment opportunities – but additional supply into this market would be very beneficial,” Ms Mercorella said.
Fraser Coast, which is made up of Hervey Bay and Maryborough, is a tight market, although it has eased somewhat. Fraser Coast has moved from 1.6 per cent in December to 1.9 per cent in March. Hervey Bay is now 1.8 per cent – a tight market – and Maryborough is now 2.5 per cent, which is a healthy market.
Cairns has also eased from 1.6 per cent to 2.1 per cent, moving this popular destination closer to a healthy rental market.
We have seen some positive news this quarter in regional Queensland, with many markets improving either a small amount or a considerable amount.
Bundaberg has moved from 1.7 per cent to 3.4 per cent. This is quite a jump, but there’s likely to be a seasonal factor at work here with the transfer season impacting vacancies as people move in and leave for employment factors. Bundaberg remains a healthy rental market.
In continued good news for Gladstone, this market has fallen for a third consecutive quarter. Essentially this market has improved significantly since March 2016 when the vacancy rate was 11.3 per cent.
“We are seeing some stabilisation of the market in this area, with the rental market delivering some cautiously improving. It’s been a long time coming and we’ll continue to wait and see with this region,” Ms Mercorella said.
Mackay is another good news story, with significant improvements from December 2016, when vacancies were 7.9 per cent.
“To see this market at 3.6 per cent, which although it is technically just outside the healthy range, it is still in reasonably good shape and this is very encouraging. It has been consistently improving over the past couple of years and we have much to be optimistic about,” Ms Mercorella said.
The Rockhampton vacancy rate has been somewhat volatile in the recent years, however, we are starting to see some consistent downward trends emerge. The fourth consecutive quarterly fall has resulted in the lowest vacancy rate since September 2014, of 4.1 per cent.
Toowoomba has tightened to its lowest vacancy rate since September 2016. With just 2.3 per cent vacancies, this market is in the tight range.
Townsville has tightened again and this is now the lowest rate it’s been since 2013. This is a continued good news story for this market which represents some of the best buying opportunities in Queensland at the moment. The vacancy rate is 3.8 per cent and while that is just outside the healthy range (healthy is 2.5 – 3.5 per cent) it is a vast improvement on the highest rate of 7.1 per cent in September 2016.