Urbis recently released the Urbis Inner Brisbane Apartment Rental Review, which highlighted the fact that the vacancy rate of the Queensland state capital was just 0.6% in the June quarter of 2019. This is a tightening from the 1% in the previous quarter, showing how demand for rentals has remained strong despite rents increasing. In fact, the average apartment is only on the market for one to two weeks before it is leased, according to the report.
This means that Brisbane has weathered the mass influx of apartments that came into the market earlier this year, as several apartment developments completed construction. As a sign of how the market will progress, this is a strong one, reiterating the point that the Brisbane market is bouncing back and will hopefully be performing strongly over the next couple of years. This is despite the fact that Brisbane is actually at the bottom of the property clock currently, although this just tells us that the market is soft right now and will be moving back up.
The report highlighted the fact that annual rental prices rise 3.6% for one-bedroom, one-car park apartments, and 3.3% for two-bedroom, two-car park apartments. Building managers who spoke to Urbis said that while they are aware of the competitive market, price growth is secondary to low vacancy.
The Residential Tenancies Authority (RTA) also recorded rental price increases across one, two and three-bedroom apartments compared to one year ago. The largest increase was three-bedroom apartments at 3.8%, followed by one-bedroom apartments at 2.4%. However, based on the amount of applications per apartment, one-bedroom, one-carpark apartments remain the most popular.
Now may be a great time to get into the market, if you haven’t already. The low vacancy rates mean demand is up, and the increase in rents is great news for investors, because they can expect to make a higher return. Of course, keep in mind that while rental demand is expected to remain low, it may not always be so in the coming years.
Another thing to note is that the Queensland Government is supporting the ‘Build to Rent’ industry, with a $70,000,000 pilot project launched late last year (2018). The program tackles house affordability by providing rental options in areas where renters work, like the Brisbane inner city. With new rental supply declining and tenant demand increasing, the market seems to be in a position where growth can be expected over the next couple of years, meaning investors may find ‘Build to Rent’ projects more attractive.
One last note: furnished apartments receive a rental premium of ~15.5% on average according to the Urbis review.
This is a good and a bad turn of events. In some senses, it’s not great that people are re-signing leases or that apartments are being snapped up so quickly, because it makes it harder to enter the market. However, the average rent for Brisbane apartments is $380 per week, which is considerably less than many other capital cities in Australia (rent in Sydney is $520/week, Hobart is $390/week and Canberra $470/week, for example). Brisbane’s affordability is part of what makes the city so good to live in. Considering all of this, even though the market may be getting harder to enter, there are still quite a number of new apartments on — or about to enter — the market, so don’t despair!