Queensland saw its vacancies tighten as rental demand in the state rose, according to the Real Estate Institute of Queensland (REIQ) Residential Vacancy Rate report for the September quarter.
Increased rental demand of nearly 1.1% for the past quarter and 3.7% for 2017 was observed, resulting to the tightening of vacancies throughout the state.
What brought about this market shift? REIQ revealed that Queensland’s population grew by 1.7% or about 83,330 new residents (for the year to March 2018). This has contributed to the absorption of about 6200 net new rental properties over the September quarter and over 21,120 net new rental properties for the previous year.
Further, supply has been significantly affecting the rental market, even leading the latter to its current state. Limited hike in supply was associated with tighter lending criteria and higher interest rates that continue to restrain individual investors from entering the property market. Potentially, demand can be better met if more new rental supply is released directly by developers into the rental market.
Overall, the Queensland rental market strengthened again this quarter, recording more tight markets and fewer weak markets compared to the last Quarter. In September 2018, the state saw 27 tight rental markets, four healthy markets and four weak markets compared to 24 tight markets, five healthy markets and seven weak markets for the June quarter.
Going by different cities, it was found that Mackay has become the tightest rental market in Queensland after vacancies tightened to 0.9% over the September quarter.
The Greater Brisbane rental market, meanwhile, is deemed tight, at 2.2%. Digging deeper, the only markets in healthy range within the region were Logan and Cabool Ture, at 3.5% and 2.8%, respectively.
REIQ also reported that rental market in Brisbane LGA tightened for a second consecutive quarter, to 2%. While property managers continue to log oversupply of rental stock in the capital city, specifically for medium-to-high density dwellings, vacancies for inner Brisbane and Brisbane’s middle ring have reached the tight level over the quarter.
Focusing on Regional Queensland, the industry group said that the rental markets in the largest regional centres continued strengthening this quarter. Gladstone, Mackay, Rockhampton and Toowoomba even registered rising median rents for the past year.
“Only two of the major regional markets in Queensland, Gladstone and Townsville, are weak markets, with vacancies above 3.5% but below 4.5%. In fact, for the first time in six years, the Rockhampton rental market moved into the tight range as vacancies tightened from 3% in June to 2.3% in September,” REIQ noted in a disclosure.
Cassowary Coast remained the weakest rental market in Queensland with vacancies of 6.3%.
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