Recent figures from Queensland’s real estate market reveal a mix of tightening rental markets, an increase of supply in medium-to-high density apartments in Brisbane and lower vacancy rates in regional areas.
The southeast of the state continues to drive the housing market with its tight vacancy rates on both the Sunshine and Gold coasts, with Gold Coast vacancy rates at 1.7 per cent in March this year compared to a peak of 5.2 per cent in June of 2011. Further north has seen similar tightening, with Cairns vacancy rates in March down to 1.8 per cent, compared to 5.1 per cent in March of 2009.
Yet, Brisbane’s vacancy rate has reached 4.4 per cent, an increase of .8 percentage points since December 2016. This is despite the number of renters increasing significantly within inner-city Brisbane, driving an increase in demand and in turn the supply of apartments.
“The 2016 Census revealed that Queensland has moved from about 30 per cent of our population renting to about 50 per cent now renting,” said Real Estate Institute of Queensland CEO Antonia Mercorella. “We can conclude that rental accommodation will always be in demand.”
“What we’re seeing now is the normal cyclical nature of property – demand builds to a point where pressure triggers the increase of supply.
“Then supply starts to build and keeps going until we see that that demand has been met. Typically, supply will briefly outstrip demand before easing back and then demand will start to build again and so the cycle goes,” Ms Mercorella said.
This cycle has coincided with a tightening of vacancy rates in areas surrounding Brisbane compared to the inner-city, with the 5-20km ring surrounding Brisbane seeing a decrease from 3.2 per cent to 3.1 per cent.
Further afield, despite the challenges regional Queensland continues to face, the seedlings of recovery are beginning to sprout in the form of tightening vacancy rates.
Gladstone saw the largest fall in vacancy rates, decreasing in the March quarter data 3.5 percentage points to 6.4 per cent, while Mackay also fell 1.5 percentage points from 7.9 per cent to 6.4 per cent.
Despite the strong performance of Gladstone, both north and south of the coastal city there were some surprising increases of vacancy rates in both Rockhampton and Bundaberg. In areas such as Ipswich, where rates decreased .4 percentage points since December to 2.0 per cent, this is worth considering within the context of a low of 1.1 per cent in June 2016 and 1.3 per cent in September 2015. Nevertheless, Ms Mercorella says that this general tightening of vacancy rates in regional Queensland reflects an increase in consumer faith of the state’s economic fortunes.
“Improving key economic indicators, including the stronger price of coking coal, and the lower Aussie dollar boosting tourism numbers, are clearly giving regional Queenslanders cause for optimism.
“The housing market in regional Queensland is closely tied to these two industries and we can see that workers are being attracted back to these cities with the tightening of vacancy rate figures,” Ms Mercorella said.
What remains to be seen is whether coking coal prices will see any further increases, with this recent price spike attributed to flooding and an increase of Chinese imports of 33.1 per cent compared to this time last year. This all sits within the context of budget paper forecasts of decreasing iron ore prices through the remainder of the year into 2018.