A record high rent price rise and plummeting vacancy rates have sparked a searing-hot rental quarter across Brisbane, with the city now poised to “nationally win the global health crisis”.
According to the latest quarterly Domain Rent Report, released Thursday, prices collectively rose a record $15 a week across the city – with median house rents reaching $415 and units climbing to $395 a week.
Unit rents, September quarter 2020 – capital cities
Domain senior research analyst Nicola Powell said while the city was a two-speed market with vacancy rates higher in the CBD compared with outer suburbs, the overall performance had been outstanding with COVID-inspired lifestyle changes fuelling the growth.
“I think that South East Queensland could be the winner at the end of this health pandemic and I think that what we are seeing (within the rental market) might even be occurring at an accelerated rate because of remote working,” Dr Powell said.
“People can keep their jobs in Sydney and Melbourne and that will have some impact on the rental market because quite often when you move you rent first.
“I also think when you compare Brisbane to other cities it still remains affordable. Brisbane unit rents could overtake Melbourne in the coming months, as Melbourne unit rents tumble pushing the rent price gap to $5 between the two cities – a four-year low.”
Dr Powell said the now red-hot rental market could also be put down to the sector bouncing back from the initial shock of the pandemic.
“I wonder whether part of the growth we’ve seen over the September quarter is a reversing and a regain during the bumpy June quarter that impacted the surge of rentals and I think that what we’re seeing is the rental market shifting back to what it was,” Dr Powell said.
“I don’t think we’re likely to be seeing rents rising again at such a rapid rate but that said I think what we’ll continue to see is rental prices rising because in terms of vacancy rates, they did rise during the peak but they have been declining.”
While the rental figures showed an overall stellar three months for Brisbane, Dr Powell said the inner city was still suffering from a lack of tourism and international students, with vacancy rates sitting at just over 7 per cent, compared to a vacancy rate of just over 1 per cent in East Brisbane.
In contrast, Sydney’s inner city rental vacancy rate is now at 5.6 per cent, while Melbourne’s skyrocketed to 13.1 per cent.
Place director of property management Cathie Crampton said excepting the still-struggling CBD, vacancy rates in their offices were an incredible low 0.25 per cent – which had inevitably led to rising rental prices.
“What’s causing the rent increase is just sheer supply and demand – we are seeing families put off purchasing decisions because of a lack of confidence and they are going into the rental market instead,” Ms Crampton said.
“We are listing at a rate that you would typically see in January and February – which are our peak times – and you would have to link that rate to the less severe restrictions … we’ve also adapted and normalised here and I believe that’s why Brisbane is not suffering.”
Ms Crampton said a growing throng of interstate migrants were also fuelling the rental market, with Sydney and Melbourne families particularly dominating the high-end market and securing their rentals sight unseen.
She expected that growing migration and the lack of investment stock would have a continued affect on vacancy rates, with strong rental growth likely to continue for the next 18 months.
Ray White Ashgrove principal Joe Denham said his office had also witnessed a burgeoning rental market, with September proving to be a record-setting month and October set to outperform it.
“We would probably let eight to 10 properties in a month usually, and now we would be close to double that at the moment,” Mr Denham said.
“If a property comes on it will go quickly, and we have had a few cases where people have been stuck.
“I haven’t seen rental prices dramatically increase but certainly if a house is usually being rented out at $500 and it becomes vacant, we’d advise it to be put at $510.”
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