Queensland’s rental crisis has worsened to a point where it is now more expensive to rent a house on the Gold Coast than in Sydney, and the chronic shortage of available properties could last for at least three years, experts say.
The median asking rent for houses on the Gold Coast has jumped to $754 a week as at the week of May 20, compared with $663 in Sydney, the SQM Research data shows.
While not quite eclipsing Sydney, the Sunshine Coast is rapidly closing in, with rents now at $606 per week.
The pandemic-driven stampede from Sydney and Melbourne into the state has sent Queensland’s rental market into uncharted territory, pushing vacancy rates down to their lowest levels since 2012, analysis from the Real Estate Institute of Queensland shows.
During the first three months of the year, vacancy rates under 1 per cent were recorded across 70.2 per cent of the state’s rental markets, with the regions experiencing extremely low vacancies.
SQM Research managing director Louis Christopher said most markets in Queensland are experiencing severe shortages of rental properties relative to demand, sparking rental increases never before seen in the state.
“We have a situation where the no vacancy signs have been out for some time,” he said. “Rental rates have surged because the demand was so strong.”
Rental demand is crazy because available supply is so scarce.
— Stevie Gray, Gold Coast landlord
In the past 12 months, asking rents for a house in Maleny on the Sunshine Coast hinterland have soared by 55.2 per cent – the largest increase across all markets, followed by another Sunshine Coast suburb, Glass House Mountains, with a 51.6 rental rate rise, data from SQM Research shows.
On the Gold Coast, asking rents in Broadbeach jumped by 40.1 per cent, Burleigh by 38.9 per cent and Stradbroke by 38.7 per cent.
Farther north in the Whitsundays, rental rates have climbed by 39 per cent in Queens Beach and 37 per cent in Airlie Beach.
The sharp spike in rents has been a windfall for Queensland landlords such as Nathan Trew, who has seen both rents and value climb across his portfolio in the past 12 months.
“I bought a unit on the Gold Coast just before COVID hit, and the value has nearly doubled and rents have risen by 30 per cent,” he said.
“I’m definitely buying more properties in this area this year because demand is so strong and tenants are willing to pay almost anything just to get a rental.”
Another Gold Coast landlord, Stevie Gray, has also reaped handsome rewards from her investment properties.
“We bought a house in Mudgeeraba last November and it had already gone up by more than $100,000 in value,” she said. “It’s currently renting as an Airbnb home and had been booked out from day one.”
She recently bought another house in Oxenford, also on the Gold Coast, which was rented out by Meagan Davey from Ray White Labrador on the first viewing.
“Rental demand is crazy because available supply is so scarce,” she said.
Chronic undersupply to persist
Buyer’s agent and active investor Eddie Dilleen of Dilleen Property, who helped Mr Trew, said the Gold Coast has further to go in terms of price and rental growth.
“I think the Gold Coast could see another 20 per cent growth in prices because the rental returns are so strong,” he said.
But the undersupply of rental properties has been building steadily for a few years because investors such as Mr Trew and Ms Gray had stayed away, said Terry Ryder, director of research firm Hotspotting.
“The creation of rental supply is a function of investor activity, and investors haven’t been active for the last three to four years, so gradually, the pool of available rental properties diminishes. It has now reached a crisis point,” he said.
“For years, investors have been discouraged through the actions of the regulator APRA and through the state governments slugging the housing market with new taxes and fees, which had created this rental crisis.
“I think it’s going to take two to three years to bring supply in because it takes time to create new dwellings.”
The tight lending to developers could also hold back the provision of large-scale supply, Mr Christopher said.
“The rental crisis will persist until developers will come to the party in these regions, but I think the banks are still operating a pretty tight ship when it comes to lending to developers, which would restrict the expansion of supply,” he said.
Mr Christopher said local councils would also need to do more to release land for housing developments.
“It’s up to the council to help resolve the rental crisis, which they can easily do, if they decide to release more land or change the zoning on the land,” he said. “Are they willing to do it? I don’t know. It doesn’t look like they are.”
Article Source: www.afr.com