Mixed results for rental vacancies

VACANCY rate data confirm growing pressure on rentals in SEQ.

The REIQ March quarter 2016 Vacancy Rate Report has revealed the rental market in the south-east corner is operating in very healthy to tight conditions, with pressure building in some key areas for more investors and more rental accommodation to meet demand.

Areas such as the Gold Coast, the Sunshine Coast, Ipswich, Caboolture, Caloundra and Noosa are all experiencing vacancy rates of less than two per cent, which is regarded as very tight.

REIQ CEO Antonia Mercorella said the data showed specific markets in south-east Queensland were crying out for greater investment and more housing construction.

“Gold Coast vacancy rates have been operating at less than 2.5% for more than two years and this is clear evidence that there is continuing strong rental demand.

“The Sunshine Coast has had tight conditions for more than four years and rental accommodation can be very challenging to find – this area could support new dwelling construction,” Ms Mercorella said.

The results in Brisbane also confirmed the REIQ’s position that the inner city is not in the grip of a glut, with the CBD recording a drop from 3.1% to three per cent.

“The inner 5km ring is at 3.3% and the middle ring is at 2.5% — these levels continue to fall within what the REIQ considers the healthy range,” Ms Mercorella said.

“We are clearly not oversupplied — at this stage.”

Outside the south-east corner, vacancy rates are weak, with most regional centres continuing to experience difficulties stemming from the mining downturn.

“Gladstone has pushed out to 11.3%, the highest in the state, and this is concerning,” Ms Mercorella said.

“The closure of the LNG project continues to have an impact as workers leave in search of jobs elsewhere.”

Bundaberg vacancy rate eased from 3.9% to 5.2%.

Rockhampton has eased slightly, from 6.1% to 6.9%.

Mackay vacancy rate has tightened, from 9.3% to 8.1%.

Townsville has tightened marginally, from 6.4% to six per cent.

“With the national debate focused on negative gearing it’s important to remember that negative gearing has been critical in maintaining a supply of investors to the market who provide rental accommodation, and this has also helped keep rent levels in check,” she said.

CoreLogic RP Data’s April Rental Review revealed that Brisbane’s average rents declined 0.6% compared with April 2015.

“Negative gearing has contributed to rental affordability and this directly benefits the one-third of Queenslanders who rent,” she said.

The tightest vacancy rate in Queensland is the Sunshine Coast Hinterland, with 0.9%, which includes towns such as Maleny, Nambour and Eumundi.

Cairns has been the stand-out regional centre, with further tightening of the vacancy rate, from 2.5% down to 2.1%.

“The Cairns property market is showing signs of consistent, solid improvement and this is a reflection of the broader economy which has rebounded well from the post-GFC woes,” Ms Mercorella said. “There are some great signs of recovery in Cairns, including significant levels of development already taking place.”