The first quarter of the year is notorious for an influx of apartments coming onto the rental market, with a large percentage of leases due for renewal between January and March. It has been widely recognised throughout the industry that 2022 has bucked this trend, with considerably fewer options available to prospective and existing tenants. The Brisbane apartment rental market is in full recovery mode from the impacts of COVID-19, with rents returning to pre-COVID levels, and in many instances exceeding them. Demonstrating that Brisbane’s property market resurgence isn’t restricted to the housing sector, inner-city apartments are on an upward trajectory in terms of value, demand and return on investment.
Over the past decade, the Brisbane apartment market has stalled due to an oversupply of stock. Now that much of these excess apartments have been absorbed, vacancy rates are resting below 1%, the lowest rate recorded since 2008. The industry as a whole is receiving the highest level of tenant applications in recent history, with applicants offering more than the asking rent in an attempt to secure the property. Whilst Brisbane apartments remain affordable to purchase in comparison to the likes of Sydney and Melbourne, median rental prices and yields are far more impressive than those of the other capital cities, with the current average surpassing 5% for return on investment.
Source – https://www.brisbanetimes.com.au/property/news/how-the-brisbane-olympics-could-cause-a-high-jump-for-property-prices-20211214-p59hid.html
Affordability, interstate migration and lifestyle factors have all contributed to the growth in rental prices and reduced vacancy rates throughout Brisbane. Employment opportunities around large-scale infrastructure projects are adding to the demand for inner-city rental properties, as well as the ten-year insurance policy of Brisbane hosting the 2032 Olympic Games. The reopening of the borders will once again see international students and workers seeking out a place to live in Brisbane, putting further pressure on low stock levels and increasingly high demand for rental accommodation.
In the current competitive rental market, tenants who are given the option to renew their leases are staying put in fear of not finding adequate accommodation elsewhere. Tighter lending conditions are delaying those looking to transition from renting to purchasing, with potential interest rate rises, increasing property prices and fewer incentives reducing the amount of first home owners entering the market. Short-stay accommodations that were turned into permanent letting apartments in 2020 due to the impacts of COVID-19 are now being withdrawn from the permanent tenant market and returning to short-term letting, attributing to the lack of available rental properties currently on offer.
The Sunshine and Gold Coast apartment markets have experienced high growth over the past 12-18 months, whilst the Brisbane unit market remained much the same. Now, thanks to a high level of southern migration, demand for affordable accommodation and excess of apartments being absorbed, the inner-city rental market is heading in the same direction as its’ coastal counterparts. After three consecutive quarters of rent increases, the Brisbane apartment market is primed for further growth, presenting a superb opportunity for investors to capitalise on current conditions while property prices remain affordable and rental prices continue to rise.