Rental returns a key concern
As investor interest continues to rise in Queensland, it is important to consider how the rental market is being affected, as good returns are vital to investment success.
WITH everyone’s focus predominantly on how our property sales markets are performing across the state, Queensland’s rental markets tend to take a back seat.
However with investor interest continuing to strengthen here in Queensland, vacancy levels are a key consideration and can be vital to the serviceability of an investment.
Investor activity is on the rise, with latest figures from the Australian Bureau of Statistics (ABS) showing volume of finance for the purchase of dwellings for rent or resale continues to trend upwards.
Over the month of May, $1.7 billion of investor finance was issued, up 11.2 per cent compared to the previous month and up 8.1 per cent compared to May last year.
Our capital city naturally has been at the top of most investors’ choice of location and with this activity adding to current level of rental supply, vacancy levels are starting to show signs of easing according to the latest findings of REIQ’s residential rental survey.
Conducted at the end of June, the REIQ’s rental survey captured a record number of rental properties, most notably for the inner Brisbane and Gold Coast rental markets.
With concerns over the never-ending supply coming on to the market, the state of the Brisbane inner market remains a hot topic of conversation.
With improved survey numbers, the findings from the June survey in fact found that vacancy levels have remained in check since the end of March.
This however, according to those surveyed, is on the back of some creative rental incentives and softening rents in order to secure a tenant.
These measures for the time being at least are seeing the vacancy rate for the inner suburbs remain around 3 per cent.
Brisbane City overall and surrounding council areas all recorded relatively steady vacancy levels compared to the end of March, however for the most part there were slight increases.
Strong rental yields on the back of relatively affordable property prices are said to be attracting investors to the likes of Logan and Ipswich.
As a result, vacancy levels have started to rise in these areas.
Local agents also report first home buyers are starting to make the move to home ownership given the current sales market and interest rate climate, which will also contribute to softening in vacancy levels in the months to come.
With softening vacancy rates and easing rental prices, one might wonder why investors continue to grow more confident.
Every investment however works in two ways: by way of rental return and capital growth.
Despite price growth levels nowhere near that being seen south of the border, the Brisbane property market still has the potential for further capital improvement. And this is likely the primary focus for many investors at present.