Sydney and Brisbane’s inner-city rental markets are beginning to stage a comeback as vacancy rates start to tighten.
Figures from the Real Estate Institute of Queensland (REIQ) and Real Estate Institute of New South Wales (REINSW) showed that vacancy rates for Sydney and Brisbane’s inner-city rental markets dropped over the first quarter of the year to reach 2.6% and 1.5%, respectively.
Out of the two however, it was Brisbane who had relatively tighter market conditions, with the whole city experiencing the biggest drop in vacancy rates.
REIQ CEO Antonia Mercorella said Brisbane have taken a dramatic drive during the quarter, as all city rings posted a combined drop in vacancy rates to 1.1%.
“This drop could reflect the return of international students as well as hospitality and entertainment workers to the inner city, or simply prospective renters focusing their search in areas where the vacancy rate is healthier and they have more options and therefore better prospects,” she said.
While the rental squeeze is being felt across Queensland, Ms Mercorella said the depleting supply of homes in Brisbane’s inner region signal a renewed interest in city living.
“Queensland has also had a steep population boost from interstate migration, with those making the shift to the Sunshine State potentially deciding to start their life in the heart of the capital city.”
However, it is also crucial to note that the flooding disaster in February contributed to the tightening of the rental market, as many were (and remain) displaced from their homes.
Ms Mercorella said more homes that were previously investment properties were effectively being removed from the rental market, shrinking an already scarce base of rental supply.
“With the second stage of rental reforms looming, the last thing we need right now in the midst of a rental crisis, is legislative reform which undermines investor confidence,” Ms Mercorella said.
“With record low vacancy rates, and 36% of our population renting their homes, we can’t afford to reduce the appeal of investing in Queensland.”
Sydney vacancy steady, other NSW regions tighten
While the revival of inner-city living was also apparent in Sydney, the overall vacancy rate in the city increased slightly during the month due to the middle- and outer-ring areas.
On a quarterly basis, however, Sydney’s vacancy rate declined from 2.8% to 2.2%.
REINSW CEO Tim McKibbin said finding a home to rent continues to present a challenge for tenants particularly outside Sydney.
“In Newcastle, vacancies fell by 0.4% to be 1.9% and the Hunter region overall dropped to 1.0%, and while the rate for Wollongong rose by 0.3% to 0.7% for the month, a sharp decrease in vacancies across the rest of the region saw the Illawarra record a result of just 0.6%,” he said.
Vacancy rates also remained low across some regional areas, particularly in the Albury, Central West, Coffs Harbour, New England, Riverina, and South East areas.
“With the cost-of-living continuing to rise, our member agents are telling us about mum-and-dad investors who are selling their hard-earned investment properties just to pay their bills each month,” Mr McKibbin said.
“With so little stock on the market, these properties are being snapped up by homebuyers — the flow-on impact is the removal of these properties from the residential rental market.”
Photo by @jtc on Unsplash