The latest vacancy report has been released, with Real Estate Institute Queensland (REIQ) finding the Gold Coast to have the highest vacancy rate increase in the December quarter, growing from 1.7 per cent to 4.8 per cent.
- Tightest Vacancy Rate: 1.0 per cent (Hervey Bay)
- Weakest Vacancy Rate: 5.9 per cent (Cassowary Coast)
- Biggest fall: -3.2 per cent (Redlands, 4.8 per cent in September quarter to 1.6 per cent in December quarter)
- Biggest rise: +3.1 per cent (Gold Coast, 1.7 per cent in September quarter to 4.8 per cent in December quarter)
Brisbane’s rings of rental activity
The inner Brisbane market also reported a rise in vacancies, lifting from 2.1 per cent to 4.0 per cent in the December quarter.
The inner Brisbane market consists of a 0-5km ring, in which renters typically leave over the Christmas/early January period, with the March quarter traditionally showing improvement.
However, REIQ also noted that local agents saw “noticeably less activity in the December/January period than usual” and that “tenants are staying put”, according to one property manager.
Brisbane’s middle ring stayed at a stable 2.0 per cent from the September to December quarter. Brisbane LGA also rose from 2.0 per cent to 2.5 per cent.
For most of 2017, Brisbane’s middle ring was around one percentage point higher (3.0 – 3.5 per cent), however the market tightened in response to an influx of tenants moving away from central suburbs to more affordable alternatives in the middle ring.
The Greater Brisbane region tightened from 2.4 per cent to 2.3 per cent, and also Outer Brisbane (Ipswich, Logan, Moreton Bay and Redland) fell from 2.8 per cent to 2.0 per cent.
According to REIQ, this market is “being dragged into tight territory by the Redlands, which fell from 4.8 per cent to 1.6 per cent”.
Investor nervousness in the Queensland market
The latest release from REIQ notes that a combination of factors is “triggering investor nervousness in the Queensland rental market and we are seeing a slowdown in investor activity”.
“Local agents in pockets of the southeast corner are reporting falling sales volumes, attributable to the perfect storm of real estate headwinds of tightened lending criteria, the legislation review, and the pending federal election.
“As federal election campaigning begins to ramp up uncertainty around potential negative gearing adjustments and capital gains tax changes have caused many investors to hit pause on possible buying activity.
“The REIQ is hearing from agents that financing is causing contracts to fall over. We’re seeing tightened lending restrictions slowing both investors and first home buyers from getting into the market.
“The State Government’s ongoing review of the Residential Tenancies and Rooming Accommodation Act is adding to the unease, particularly given the types of changes introduced in Victoria following a similar review of its rental legislation.
“Investors are concerned about a loss of control over their asset and worry about unwieldy legislation that will reduce their rights while ramping up concessions to tenants.”