Green shoots for Queensland vacancy rates?

Rental conditions appear to be improving in Queensland according to the state's real estate body.

The Real Estate Institute of Queensland (REIQ) Vacancy Rate Report for the June 2023 quarter found that the state-wide vacancy rate rose to 1.0% for the first time since December 2021. 

The report, which covers 50 local government areas (LGAs) and sub regions in Queensland, found that vacancy rates relaxed in 38 regions, held steady in three, and tightened in nine.

Across the vast majority of the state however, vacancy rates remain 'tight' between 0 - 2.5%.

REIQ CEO Antonia Mercorella said the June quarter results signal a slow return to healthier vacancy rates across most of the state.

"We're starting to see some early signs of the rental market starting to soften just ever so slightly, with vacancy rates showing small increases in the majority of regions," Ms Mercorella said.

"It was too early to call in the March quarter, which also saw a slight lift, but now with back-to-back, quarter on quarter improvement, we can see some promising green shoots.

"There is still a long way to go for Queensland's rental market to reach healthy rates, but these results are a step in the right direction with a little more movement and increasing opportunity and choice for renters wanting to get into the market."

Ms Mercorella said the lift in vacancy rates is in line with what real estate agents on the ground are reporting back.

"They say there's more rental housing freeing up, particularly in higher price point suburbs which have probably hit the peak of rent increases," she said.

The report found most vacancy rate lifts were marginal at 0.1% to 0.2% which was the case across Greater Brisbane, including Brisbane LGA (1.0%), Ipswich (1.1%), Logan (1.0%), Moreton Bay (0.9%), Caboolture (1.1%), Pine Rivers (1.0%), Redcliffe (0.8%), Redland (1.3%) and Mainland (0.8%).

However, vacancy rates rose the most in the Redland's Bay Islands where demand for island living continues to weaken. Vacancy rates here rose to their highest level ever at 6.3%.

Investor exodus = higher vacancy rates?

The rise in vacancy rates may come as a bit of a surprise given an uptick in investors selling, but Ms Mercorella said many renters are opting for sharehouses or moving back in with parents, potentially freeing up rental stock.

"Necessity is the mother of invention, and because people have been unable to find the type of rental property they are looking for in the area they're looking in, and something that works within their budget restraints, they are thinking outside of the box, adapting, and finding alternative solutions," she said.

"These alternative arrangements include moving back in with parents where possible, moving in with other tenants in a co-tenancy instead of sole tenancy, and looking for units or townhouses instead of a freestanding home, or casting their net wider by looking at nearby localities with greater supply."

Recent CoreLogic research found the proportion of investor listings on the market have shot up in inner city areas. In Sydney, Melbourne and Perth, investor listings for May were higher than the previous decade average.

Listings from property investors is highest in inner Sydney, where the decade average of new listings coming onto the market from investors is 38%. In May, listings surged to 57%.

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