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.

The Courier-Mail - Property - - MARKET OUTLOOK -

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.

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