Will Qld’s rental crisis find a turning point in 2023?

REIQ chief executive Antonia Mercorella welcomed the momentary relief, but she highlighted that the state’s vacancy rate was still incredibly tight as it sits at a critical level of below 1 per cent. 

Vacancy rates at 2.5 per cent are categorised by REIQ as a tight market, while rental markets with vacancies of 2.6 per cent to 3.5 per cent showed a healthy balance between supply and demand. 

On the other end of the spectrum, a vacancy rate of 3.6 per cent and above characterised a “weak” rental market. 

“Promising as this news may seem, we’re taking it with a grain of salt until we see if this uplift is here to stay or if it’s merely a seasonal fluctuation,” Ms Mercorella said. 

She added that tiny movement in the vacancy rates, however hopeful, should not be “overanalysed”. 

“What this essentially means is the market is holding tight, and only time will tell if a trend is emerging,” she added. 

Ms Mercorella noted the influx of rental property changeovers at the end of the year is “certainly not a new phenomenon”, citing data from the last 10 years that showed patterns of generally higher vacancies in December.

Additionally, the executive highlighted that there had been anecdotal evidence from property managers that a higher-than-usual number of renters were choosing to stay in their current rental rather than attempt and secure another property given the tight market conditions.

“Even with this small improvement in rates, let’s not forget that we’re still talking about incredibly low vacancy figures, which tells us there’s nowhere near enough rental properties to meet demand, and tough conditions continue for tenants,” she said.

Further analysis of the data showed that out of the 50 local government areas and subregions, 43 experienced an increase in vacancy rates over the quarter, while the remaining seven were unchanged during the same period. 

Upward movements in most areas stayed between 0.1 and 0.3 per cent, but Redland’s Bay Islands stood out from its peers by recording the biggest surge in the vacancy rate, increasing by 1.8 per cent to currently stand at 6 per cent.

Another area where prospective tenants found reprieve was Mount Isa, lifting 1.1 per cent to 2.4 per cent — teetering on the edge of “healthy”.

Other areas to record a significant increase in available rental listings were Isaac (up 1.7 per cent), Gladstone (up 1.6 per cent), Mount Isa (up 1.1 per cent), Burdekin (up 1.1 per cent), Mackay (up 1 per cent), Townsville (up 1 per cent), Central Highlands (up 0.9 per cent), Maranoa (up 0.9 per cent) and Lockyer Valley (up 0.8 per cent).

Surprisingly, tourism areas such as Hervey Bay and Fraser Coast also welcomed more residential vacancies in December, rising by 1.1 per cent and 0.9 percent, respectively, during the quarter. 

The number of vacancies in the Gold Coast and Sunshine Coast rates barely budged — both now sitting at 0.7 per cent. 

Meanwhile, prospective renters saw no relief in Caloundra Coast (0.7 per cent), Maroochy Coast (0.4 per cent), or Sunshine Coast Hinterland (0.4 per cent), which includes towns such as Maleny, Nambour and Eumundi — as vacancy rates in the areas were unchanged. 

The areas with the tightest vacancy rate were the Southern Downs (0.2 per cent), Cook (0.3 per cent), Goondiwindi (0.3 per cent) and Tablelands (0.3 per cent).

Minimal change for Queensland’s vacancy rates forecast in 2023

Ms Mercorella said the REIQ’s expectation is that this year will bring more of the same incredibly tight conditions for the Queensland rental market.

“It’s likely that 2023 will be a case of — new year, same rental pressures,” she said.

The executive said that the pressure is still on for the state’s rental market due to the continued impact of population growth thanks to the strong interstate and international migration, which includes students set to return in force to the south-east corner. 

“This increased demand will continue to apply pressure to an already strained rental market,” Ms Mercorella stated. 

While the Sunshine State capital is “crying out for additional housing supply to ease the tight rental conditions”, she noted that building costs and planning red tape are putting the brakes on new construction.  

She also pointed out that higher costs, increasingly challenging lending conditions, and reduced legislative rights are deterring vital private property investment that can help boost rental supply in the state. 

“This report has delivered some fleeting good news, but we’re certainly not at a turning point yet, and with these economic factors continuing to apply pressure, it’s hard to see any significant changes in sight,” she concluded.