Qld’s rental market sees ‘green shoots’ of easing vacancy rates

Data from the Real Estate Institute of Queensland (REIQ) showed the state’s vacancy rate rose from 0.9 per cent in the March quarter to 1 per cent over the three-month period to June.

While the figures are still below the vacancy rate that the institute categorises as “healthy”, it highlighted that this is the first time since December 2021 the portion of available residential properties in the state are not below 1 per cent.

Vacancy rates at or below 2.5 per cent are categorised by REIQ as a tight market, while rental markets with vacancies of 2.6 per cent to 3.5 per cent are considered to have a healthy balance between supply and demand. Meanwhile, a vacancy rate of 3.6 per cent and above characterised a “weak” rental market.

In another positive sign of easing rental conditions across most of the state, vacancy rates increased in 38 regions, remained stable in three, and tightened in nine out of the 50 local government areas (LGAs) and subregions in Queensland during June.

Across Greater Brisbane, including Brisbane LGA (1 per cent), Ipswich (1.1 per cent), Logan (1 per cent), Moreton Bay (0.9 per cent), Caboolture (1.1 per cent), Pine Rivers (1 per cent), Redcliffe (0.8 per cent), Redland (1.3 per cent) and Mainland (0.8 per cent), most improvements in vacancy rates were limited to a slight lift of 0.1–0.2 per cent.

During the winter months, demand for coastal living also moderately cooled off, as is typical for seasonal markets.

Redland’s Bay Islands, where demand for “island living” continues to weaken, recorded its highest-ever vacancy rate of 6.3 per cent.

In Queensland’s tourism centres, there was a notable surge in vacancies on the Maroochy Coast (1.9 per cent), Sunshine Coast (1.6 per cent) and Caloundra Coast (1.3 per cent). Additionally, Noosa saw a remarkable increase, reaching the healthy range with a rate of 3.1 per cent.

Similarly, the Gold Coast (1.2 per cent), Hervey Bay (1.3 per cent) and Fraser Coast (1.1 per cent) had more rental properties on the market for longer during the June quarter.

Maryborough’s rental market remained exceptionally tight with a vacancy rate of 0.5 per cent but demonstrated continuous improvement, considering that not long ago it hovered around 0.1–0.2 per cent for two years. Similarly, Cairns (0.9 per cent) also experienced a gradual but steady increase in vacancies.

REIQ noted a different story is unfolding across the state’s regional markets. Cook (0.1 per cent) and Goondiwindi (0.1 per cent) continue to have virtually no vacancies, while the Southern Downs (0.2 per cent) and Tablelands (0.4 per cent) also remain concerningly tight, with only minimal improvement over the quarter.

Among the regional centres, Gladstone recorded the highest rate at 1.7 per cent, whereas Bundaberg saw significant improvement at 1.1 per cent, marking its highest vacancy rate since the pandemic began.

On the other hand, Mackay (0.8 per cent), Rockhampton (0.9 per cent), Toowoomba (0.9 per cent) and Townsville (0.9 per cent) experienced relatively minor fluctuations, with all regional centres remaining stubbornly in tight territory.

A notable exception in the regional areas is Mount Isa, maintaining a healthy vacancy rate of 2.7 per cent.

REIQ chief executive Antonia Mercorella said the movement over the quarter showed that the majority of areas in the state is “crawling towards healthier rates”.

“We’re starting to see some early signs of the rental market starting to soften just ever so slightly, with vacancy rates showing small increases in the majority of regions,” Ms Mercorella said.

While the March quarter also saw a modest lift, the executive said it was “too early to call” a rebound in vacancy rates back then.

“[But] now with back-to-back, quarter on quarter improvement, we can see some promising green shoots,” she said.

While Ms Mercorella acknowledged there is “still a long way to go” for Queensland’s rental market to reach healthy rates, she pointed out “these results are a step in the right direction with a little more movement and increasing opportunity and choice for renters wanting to get into the market”.

She highlighted the latest quarterly data is also in line with anecdotes from on-the-ground agents, who reported an increase in rental housing in the market, notably in “higher price point suburbs which have probably hit the peak of rent increases”.

Quoting the old adage, “Necessity is the mother of invention,” she noted the challenge of finding the right rental property within their desired location and budget constraints has driven people to think “outside the box” for accommodation solutions.

“These alternative arrangements include moving back in with parents where possible, moving in with other tenants in a co-tenancy instead of sole tenancy, and looking for units or townhouses instead of a freestanding home, or casting their net wider by looking at nearby localities with greater supply,” she stated.