Unprecedented rates of interstate and overseas migration have sparked one of Brisbane’s strongest rental markets in a decade, with the city clocking record-high median prices that, in parts, are outstripping Melbourne.
Rental prices for houses rose by $10 to $425 a week during the December quarter, with units following close behind at $400 per week – up from $395 three months earlier, the latest Domain Rent Report shows.
It’s the city’s second consecutive quarterly price rise, and one that industry experts say could spell the end of Brisbane’s budget property era, with the pandemic-fuelled migration and a soaring property market the key drivers.
Domain senior research analyst Nicola Powell said for the first time in five years it was cheaper to rent a unit in Melbourne than Brisbane, with houses undergoing the steepest annual increase in seven years thanks to those two consecutive quarters of growth.
Source: Domain Rent Report, December quarter 2020
“Brisbane gained the most interstate residents than any other capital over the June quarter … the lure of the city is real – from the lifestyle and the climate to the containment of the virus,” Dr Powell said.
“Tenants are (also) seeking liveability, affordability and are no longer tied to a specific location in the work-remote era. Brisbane’s vacancy rate is likely to tighten further in the coming months due to the rising interest from southern states and the flow of residents from regional Queensland into Greater Brisbane.
“This is a milestone because the commentary around Brisbane has been around that heightened unit development … but the city has passed that construction peak, and now we’ve seen that pool of stock decline.”
Dr Powell said the estimated choice of vacant rentals had also dropped by about one third in recent months – a trend that had reverberated out to Queensland’s top lifestyle hot spots, the Gold Coast and the Sunshine Coast.
“House and unit rents reached record highs in the Sunshine Coast and Gold Coast – in fact, they both outperformed Brisbane,” Dr Powell said.
“Gold Coast house rents increased $20 over the quarter and year to $540 a week.”
Source: Domain Rent Report, December quarter 2020
Across Brisbane, median rents are up by $15 a week compared to December 2019, with the vacancy rates down by one percentage point over the past 12 months to a tight 1.9 per cent.
It comes as Brisbane emerges from its snap three-day lockdown, with open house inspections limited to 20 people until 1am January 22.
Director of property management at Place Estate Agents Brisbane, Cathie Crampton, said the red-hot rental market led to a record-breaking month for their team during December – with an unprecedented 20 per cent of rentals leased by interstate or overseas tenants.
“Some of those properties were leased sight unseen as well,” Ms Crampton said, adding that the vacancy rate was extremely low.
“We had over 100 groups through one of our recent rental listings … in fact, the demand is so high we’re increasing the rent prices in 35 per cent of our listings.
“[The market] has almost tipped to the edge – there’s just so much demand and no supply. I haven’t seen conditions like these in 15 years.”
While the rental price hike could place pressure on low-income tenants, Ms Crampton said the market was undergoing a necessary price correction, following several years of sluggish growth.
“There were no rental increases, quarter on quarter, for a long time … so it’s an inevitable adjustment,” she said.
“And now we have optimum conditions to increase rent and improve yield – there has never been a better set of conditions in Brisbane.”
Ray White Bulimba and East Brisbane managing principal, Brandon Wortley, said the soaring rental industry had particularly reached new heights in the prestige sector – with houses priced at $1000 or more a week in incredibly high demand.
“There’s a lot of parts to this growth – but in our eyes, it’s the record migration from what we call ‘boomerang renters’,” Mr Wortley said.
“These are people who were originally from Brisbane but who moved abroad to chase a career or life experience … and I think honestly in this period (during the pandemic) they’ve gone ‘holy smokes I’m so far from home right now’ so that’s driving a lot (of our rental market).
“A lot of them have also forgotten a lot about the city, so what they are doing is renting (rather than buying) to test out a neighbourhood for six or 12 months.
“But then there are those who want to buy – to take advantage of the record-low interest rates – but because there’s such a high volume (of people) in this sector, it’s also driving the rental market.
“I think there’s a lot more interest in upper-end rentals than there has been historically … and we’re in that sweet spot right now and I think it will continue for a while.”
Article Source: www.domain.com.au
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