Brisbane rental guarantees mask optimistically pitched apartment product: Pete Wargent

SQM Research reported its always-excellent vacancy rates index today for the month of May 2018, with vacancy rates nationally at 2.1 per cent, down marginally from 2.3 per cent a year earlier. 

 

And the figures showed a fifth consecutive decline for vacancies in Brisbane.

 

Brisbane's city-wide vacancy rate was down to 2.9 per cent, from 3.5 per cent a year earlier. 

 

This accords well with what we've been seeing on the ground in Brisbane.

 

Indeed, family-appropriate dwelling stock is now often renting at the first open home, with numerous instances of multiple offers and rentals achieving above the asking price. 

 

There are still some notable pockets of pain, of course, most evidently in the inner-city high rise 'investor stock', where rental guarantees mask what is often optimistically pitched product.

 

There are also more high-rise units in the post for the CBD, with the SkyTower construction now well underway. 

 

Generally speaking and across the city, however, the rental market is rebalancing as construction slows, thanks to positive interstate migration and somewhat pacier net overseas migration, and is in better nick than a year earlier.

 

Plotted below are the vacancy rate figures by capital city smoothed on a 6mMA basis (not seasonally adjusted). 

 

As you can see, while Brisbane has now turned a corner, Sydney is now experiencing a high rate of unit completions with considerably more new apartment stock choice for renters. 

 

Sydney's vacancy rate of 2.5 per cent was well up from 1.7 per cent in May 2017. 

 

Elsewhere, Perth is grinding its way back from its punishing rental market nadir (please don't email about terminology: if you don't like it substitute with an antonym; it's really not that difficult!), while Hobart remains a tight rental market despite a slight loosening year-on-year.

It will be interesting to see at what point rising prices in Hobart spark a significant supply response, in what is a relatively small city, though some developers are reluctant to stray from the mainland due to the additional logistical challenges. 

 

Melbourne's vacancy rate was the same as it was a year earlier at just 1.4 per cent, despite hectic rates of dwelling construction. 

 

The Adelaide rental market has generally been tightening for some time now.

And finally, Canberra's rental vacancies have plummeted since the experiment with housing taxation, and it remains to be seen when a new rental market equilibrium is reached.