Qld renters ‘virtually have nowhere to go’, says REIQ

The latest data from the Real Estate Institute of Queensland (REIQ) showed strong indications that the state’s rental crisis is not letting up, as vacancy rates in the vast majority of the Sunshine State continued to be below 1 per cent during the three-month period to September at 0.6 per cent. 

For most parts of the state, this marks the ninth consecutive quarter that vacancy rates fell below 1 per cent — significantly below the levels considered by the state’s peak real estate body as “healthy”.

According to the institute, vacancy rates below 2.5 per cent indicated a tight market, while rental markets with vacancies of 2.6 per cent to 3.5 per cent showed a healthy balance between supply and demand. 

On the other end of the spectrum, a vacancy rate of 3.6 per cent and above characterised a “weak” rental market. 

A further look into REIQ’s data showed a number of areas had plateauing vacancy rates compared to the previous quarter. 

Out of the 50 local government areas and subregions, 19 markets maintained the same vacancy rate as the previous quarter, according to REIQ. 

These included Brisbane LGA (0.8 per cent), middle-ring Brisbane (0.7 per cent), outer-ring Brisbane (0.6 per cent), Ipswich (0.6 per cent), Sunshine Coast statistical division (0.8 per cent), Sunshine Coast (0.6 per cent), Fraser Coast (0.5 per cent), Hervey Bay (0.6 per cent), Maryborough (0.2 per cent), Cairns (0.5 per cent), Gladstone (1 per cent), Rockhampton (0.4 per cent), Townsville (0.5 per cent), Banana (0.5 per cent), Cassowary Coast (0.8 per cent), Livingstone (0.4 per cent),  and Tablelands (0.2 per cent).

Goondiwindi and Southern Downs also retained their status as some of the tightest rental market areas in the state, as their vacancy rates remained unchanged at 0.1 per cent on a quarterly basis. 

The only other area that has almost no available rental properties is South Burnett, where vacancy rates contracted from 0.3 per cent in the June quarter to 0.1 per cent in the September quarter.

And while some areas did experience a shift, the institute noted that most only saw a minimal 0.1 per cent movement up or down.

A total of 14 markets experienced an increase of 10 basis points in vacancy rates over the quarter. These included the rental markets of Greater Brisbane (0.7 per cent), Logan (0.7 per cent), Moreton Bay (0.5 per cent), Caboolture (0.5 per cent), mainland (0.5 per cent), Gold Coast (0.6 per cent), Bundaberg (0.5 per cent), Mackay (0.6 per cent), Toowoomba (0.4 per cent), Charter Towers (0.5 per cent), Gympie (0.4 per cent), Isaac (1.1 per cent), Mareeba (0.4 per cent), and Scenic Rim (0.6 per cent).

There were only nine markets to see a 10-basis-point decline in vacancy rates quarter on quarter, including Redcliffe (0.4 per cent), Maroochy Coast (0.4 per cent), Hinterland (0.4 per cent), Noosa (1.0 per cent), Burdekin (0.4 per cent), Central Highlands (0.5 per cent), Cook (0.3 per cent), Lockyer Valley (0.4 per cent), and Maranoa (0.5 per cent).

Inner-city Brisbane saw a more noticeable change over the quarter, falling by 20 basis points to a record low of 0.8 per cent — the first time this market has dropped below 1 per cent in the past decade. 

REIQ noted the decline could indicate the return of workers to the central business districts and a revitalised demand for inner-city living post-COVID-19.

Whitsunday was another area to record a 0.2 per cent decline in the vacancy rates, shifting down from 0.8 to 0.6 per cent this quarter. 

REIQ noted that the fall could indicate that employment in the area is strongly rebounding in line with tourism and mining industries and the return of international workers.

The other area to post a 0.2 per cent fall during the period was Caloundra. 

Over the quarter, Redland’s Bay Islands saw a 1 per cent increase in vacancy rates — making the market the biggest gainer over the period and resulting in the state’s weakest vacancy rate of 4.2 per cent. 

‘No light at the end of the tunnel’ in sight for Queenslanders

REIQ chief executive Antonia Mercorella said it was unlikely vacancy rates would see any significant shifts in the foreseeable future due to “complex supply and demand constraints”. 

“These statistics aren’t just numbers; they tell a story about how challenging it is for people struggling to find a home. 

While I wish I could tell these people that we can see light at the end of the tunnel for them, the sad reality is that renters could be enduring this tight market for some time,” she stated. 

With the state’s average household size shrinking to only 2.5 persons per dwelling, Ms Mercorella said that the region’s housing supply is feeling the “extra strain”. 

“[That’s] even before looking at the extraordinary external pressures from high levels of migration, and immigration to come,” she noted. 

She also acknowledged that there are several obstacles that have hamstrung the state’s supply and pathways to home ownership. 

“This is what needs to be rectified in order to restore some balance to the market and address the true cause of the crisis — while also finding remedies for the symptoms,” she insisted. 

The REIQ said that the state government had identified that Queensland has 55,000 fewer rental dwellings than expected based on historical trends and forward projections.

“Some of this sizeable rental market shortfall was accounted for, but the remaining ‘missing’ properties were not able to be explained,” she said.

Ms Mercorella said that for some time now, the institute has been ringing the alarm bell over several regulatory interventions, including more onerous lending changes and tougher tenancy laws that have had an impact on investment.

“Increasingly, we are also seeing investors charged at higher rates for property-related fees and expenses, including stamp duty costs, higher local government fees, and mortgage repayments,” she stated. 

As these regulatory and financial headwinds cause some investors to make the choice to exit the market, the REIQ executive said that “more needs to be done to retain and attract investors to the long-term rental market to pump up the rental pool and boost vacancy rates”.