Queensland's rental property market operating at two speeds
Queensland's property market continued to operate at two speeds in September, with vacancy rates tight in the southeast corner while holding steady, albeit weaker, in the regions, REIQ data suggests.
The rental markets from Gympie south to the Gold Coast and west to Toowoomba are near historically tight levels, with vacancy at less than 1% in some parts of the Sunshine Coast.
REIQ CEO Antonia Mercorella said demand was rising and limited inventory meant the market was very tight, particularly in Caloundra and Noosa, with both areas registering a vacancy rate of 0.9% – the lowest in the state.
“We’re seeing strong demand for rental properties in these areas and while a small level of this demand is seasonal, it does mean good news for investors who have certainty around finding tenants for their properties,” she said.
Brisbane continued its long-term trend with a vacancy rate of 2.8%, still in the healthy range.
“We continue to see strong demand for dwellings in the Brisbane market and despite some commentators who suggest that we are facing a glut the data tells a different story,” Mercorella said.
“New apartments in Brisbane are reportedly being snapped up by investors and owner-occupiers, although the vacancy rate softened slightly to 3.3% from 3%.
“Local agents are telling us that in order to secure a tenant, rental incentives are being offered,” she said.
“Asking rental prices are also said to be softening in response to the level of supply, however, it is evident that tenant demand is still there.”
The Gold Coast dropped to 1.7% from 2.3%, while the greater Sunshine Coast area edged lower to 1.3% from 1.6%.
Fraser Coast recorded a small dip to 3.7% from 3.8%, reflecting a trend towards a healthier investor market.
In Toowoomba, the rate dropped to 2.7% from 3.1%.
This reflects the strength of the region and the diversity of its local economy. Improving employment prospects are adding to local confidence with the second range crossing scheduled to begin construction in 2016.
Regular international freight flights out of the Brisbane West airport are also expected in the not so distant future.
Further north, the market is softer, with Gladstone's vacancy rate weakening to 7.1% from 5.2%.
Mercorella said the market in Gladstone was facing challenges, but with promised infrastructure projects emerging on the horizon a recovery was likely.
“With potential projects slated to go ahead, such as the Eden Bann Weir scheduled for next year and the Gladstone to Fitzroy River pipeline, employment should improve and with that, the property market.”
Further north, Rockhampton revealed a steadily improving picture as the vacancy rate improved to to 4.5% from 6%.
Mackay held steady at 9.1% for a second consecutive quarter.
According to local agents, despite the somewhat high vacancy levels, optimism was returning as employment prospects firmed.
“We are hearing that tenants are taking longer leases in response to better employment certainty and while it would be premature to suggest a turnaround was imminent we are confident in our position that the bottom has been reached,” Mercorella said.
In the state’s north, Townsville rose marginally to 5.6% from 5.3 percent.
Cairns was one of the best performing regional centres, with a drop to 2.6 percent from 2.7 percent, reflecting continued employment and improvements in the tourism market.
Mercorella said that overall, Queensland’s market was relatively solid compared with other states.
“The southeast corner is driving growth and this will eventually cascade throughout the rest of the state,” she said.
“We’re hearing that business confidence is improving in some regional centres as those economies diversify and manage the resources downturn impact.
“In Brisbane, consistently strong capital growth for the past two years gives us reason to be optimistic that equilibrium will be restored in the rest of the state,” she said.