Property analysts have given their most dire warning for the Brisbane apartment market yet, predicting rents could fall as much as 10 per cent in the next 12 months.
Michael Matusik from Matusik Property Insights made the call: “It has the potential to ‘get out of hand’, I guess you could say,” he said.
Mr Matusik cited a number of different economic factors for the potentially significant drop in apartment rents. “There’s a pretty persistent unemployment rate,” he said. “You’ve got about five or six people applying for every job.”
“And wherever you see markets with a [rental] vacancy rate of 3 per cent you see rents either stay flat or fall.”
This coupled with the rising supply of rentals in Brisbane, meant investors would be forced to drop their prices to compete with cheap, new and readily available apartments in inner city Brisbane.
“The person who’s got the second hand unit or the house in the inner middle ring suburb, they have to drop the rent to attract tenants,” Mr Matusik said.
Mr Matusik said investors needed to prepare for the fall to be as much as 10 per cent. “It’s a worse case scenario but it could be that much,” he said.
But Domain Group chief economist Andrew Wilson said a 10 per cent fall in rents was unlikely.
“I think we’d have to see a lot more vacancies than we have now,” he said.
He conceded current sentiment was gloomy. “There’s no doubt there’s strong downward pressure on rents in Brisbane,” he said.
“We’re releasing our rent report next week and it will show a fall in rents in Brisbane.”
Dr Wilson thought 10 per cent would be an extreme drop and said immigration growth would slow the fall. “We are seeing a pick up in migration in South East Queensland now,” he said.
“I think affordability is attracting people back.”
Michael Yardney from Metropole was largely on-board with Mr Matusik’s prediction. “I think it is very likely there will be a significant fall in income and minimal capital growth for five to 10 years,” he said. “I never thought that inner city or off the plan apartments have made good long term investments.”
Mr Yardney said the relative conformity among off-the-plan apartments meant their biggest selling point was the fact they were brand new. “Each big building is built out by an even larger tower, so there is no real scarcity.”
He also was concerned a lot of the apartments wouldn’t sell well with owner occupiers if investors weren’t interested. “What I’m getting at is there’s more stock but there’s a lot of the wrong stock, it’s not how most of us want to live,” Mr Yardney said.
To avoid empty rentals, Mr Yardney said landlords should reassess their expectations of income. “Investors will have to prepare for longer vacancies initially and less cash flow over the term of their investment,” he said.
Mr Matusik said many people in the industry were in denial about the potential effects of the apartment oversupply. “A lot of owners and investors with older stock don’t understand we need to meet the market and roll with the punches.”
“The market will sort itself out.”
Originally Published: https://www.domain.com.au/
How to attract and keep top tenants in your rental property
Being a landlord isn’t always easy. Dealing with tenants who are bad payers or appear to be on a mission to turn your rental property into a rubbish tip can be time consuming and stressful.
Renters currently have the upper hand in many Australian cities. Inner-city Brisbane, for example, has experienced a high volume of apartment construction in recent years and landlords have had to reduce rents and offer incentives to lock in leases.
With renters able to pick and choose, landlords need to try harder to ensure they attract –and keep – top quality tenants.
Here are some tips for achieving this:
Best face forward
The way you present and market your property will influence the type of interest you receive. If a rental property appears dirty and unkempt, prospective tenants may assume you’ll be equally lackadaisical once they’re in residence. This may be appealing to those who share your ‘relaxed’ approach to home and garden care, but it’s likely to be a turn-off for renters who keep things in proper order. The better the home looks and feels, the higher the calibre of applicants you’ll attract (and the higher the rent you can potentially command).
Faced with the choice between your dwelling and another that’s broadly equivalent, tenants are likely to go for the property that offers extras that add to their comfort. Installing air conditioners in the living room and main bedroom may tip the balance in your favour, or deter good sitting tenants from considering their options during the summer sizzle. Similarly, a dishwasher in the kitchen and freestanding wardrobes in bedrooms that lack built-ins are modest investments that can make a big difference.
Gardening made easy
Not everyone has a green thumb. Ensuring garden maintenance is as easy as possible can make your house or townhouse appealing to renters who may be good payers, but don’t have the time or inclination to mow and prune. Consider providing a green bin, include a monthly or quarterly yard clean-up in the rent and plant shrubs and trees that require minimal TLC.
Lock it up
If you want tenants to take good care of your property, it pays to demonstrate that you’re committed to looking after their personal property too. Installing security that’s appropriate to the home and the neighbourhood can provide peace of mind and make it cheaper and easier for tenants to obtain contents insurance.
Attend to maintenance
Having to ask repeatedly for something to be fixed is irritating, particularly if the request is reasonable. Attending to repairs as soon as possible tells good tenants you respect them and value the relationship. Conversely, making them wait weeks for maintenance requests to be actioned may result in them looking elsewhere for a landlord who can keep up their end of the bargain.
Reasonable rent rises
The market will determine the rent you can charge. If what you’re asking isn’t on par with equivalent dwellings in the same area, renters will assess their options. Should a lease be due to expire and you’re happy with the tenant, it’s wise to be realistic about rent rises – or open to the possibility of a reduction if the market has dropped. Keeping a good tenant is usually easier than finding a replacement
Brisbane has fewer properties for rent but vacancy rate still high
There are fewer homes for rent in Brisbane than a month ago, new figures show. Picture: Thinkstock.Source:ThinkStock
THE number of properties available for rent in Brisbane is shrinking, but it still has the second highest residential vacancy rate of any capital city in the nation.
Data released by SQM Research reveals the Queensland capital’s vacancy rate slipped to 3.2 per cent in March, with 10,246 properties available for rent — down from 3.4 per cent in February.
But the Brisbane rental market is not nearly as tight as some other capital cities, with Hobart and Canberra both sitting on a vacancy rate of just 0.6 per cent.
Only Darwin has a higher vacancy rate at 3.6 per cent.
SQM Research managing director Louis Christopher said asking rents were also rising in some capitals, particularly in Melbourne.
“Reflecting the tight rental conditions in Melbourne, asking rents for houses were up by 1.1 per cent over the month to 12 April 2018, while asking rents rose 4.7 per cent over the year,” Mr Christopher said.
“We can expect continued strong growth given the high population growth that Melbourne is currently experiencing, creating rental demand.”
But in Sydney, the vacancy rate is higher than it was a year ago and asking rents are falling as a result.
Capital city asking rents rose by half a per cent nationally last month to $563 a week for houses.
Unit asking rents rose 0.2 per cent to $443 a week.
The asking rent for a three-bedroom house in Brisbane remains at $447 a week, while for units it stands at $366 — the same as a month ago.
Brisbane renters: You’ve got it cheap, new report shows
Think you’re paying a lot in rent? If you’re in Brisbane, chances are you’re paying less than those living on the Gold Coast, Sunshine Coast and even Redland.
New figures from the Domain Group’s March quarter Rental Report show Brisbane is one of the cheapest capital cities to rent in the entire country, beaten only by Adelaide and Perth, while rising rents in other parts of south-east Queensland have well and truly outstripped Brisbane’s lacklustre rental market.
In the Brisbane LGA, rents have remained flat the entire past 12 months. The median asking rent for houses is still $450 a week, with no yearly or quarterly change. Units have also remained flat over the March quarter, at $390 a week, dropping only slightly by $5 a week since the same time last year.
Units in the Redland LGA are attracting higher rents than those in Brisbane, according to the new Domain report. Photo: Reinhard Dirscherl / Alamy
Meanwhile, on the Gold Coast, the median asking price for a rental house has risen by 6.5 per cent over the past year to hit $490 a week – that’s $30 a week more than this time last year.
Unit rentals have also gone up on the glitter strip by nearly 5 per cent to $430 a week, making the Gold Coast the most expensive region to rent a property in south-east Queensland.
Houses on the Sunshine Coast have a median asking rent of $490 a week, while units in Redland are asking $400 a week. In Ipswich, house rents have increased by 2.9 per cent and units by 3.7 per cent over the past year.
Units and houses on the Gold Coast have the highest weekly median rent asking prices of any of the south-east Queensland LGAs.
But the news isn’t all bad for Brisbane. Stagnated rents were a welcome relief from the ever-increasing cost of living, according to national research manager at PRDnationwide, Dr Diaswati Mardiasmo.
“While these figures may not look particularly exciting, the thing that stands out for me is how affordable Brisbane is,” Dr Mardiasmo said.
“The cost of living is continually going up – rises in electricity, rises in rates, rises in water bills and private health – so to hear that your rent is staying the same will be a relief to so many tenants.”
|WEEKLY MEDIAN ASKING RENTS (HOUSES)|
And tenants who are not stretched financially are far more stable, which benefits landlords too, she said.
“I’m looking at it from the perspective of the renter who can have that stability and affordability but you know, this lack of price increase also benefits landlords,” she said.
“When rents don’t go up, tenants stay where they are. When rents go up, often they’re forced to move out because they can’t afford to pay more. When that happens, often the landlord is left with a vacant property before they can find a new tenant, which is a lot worse.”
Amid the widely publicised unit oversupply and falling unit prices, rental yields have held strong.
Brisbane unit yields sit at 5.06 per cent after strengthening by 2.8 per cent over the March quarter. Yields are also up 1.3 per cent year-on-year.
“When you consider the fear of oversupply and the vacancy rate, these figures are actually quite heartening,” Dr Mardiasmo said.
“There’s been a lot of negative commentary surrounding the unit market in particular, so from an investors point of view, the fact that yields are holding well is comforting.
|MEDIAN WEEKLY ASKING RENT (UNITS)|
REIQ zone chairman Andrew Henderson conceded the Gold Coast was fast becoming a difficult market to break into, for tenants and buyers alike.
“What’s changed recently is the buyers. We used to have 50-50 owner-occupiers and investors but these days 80 per cent of our buyers are owner-occupiers,” he said.
“What that means is that properties that used to be rentals are now being bought by owner-occupiers; the pool of rentals is shrinking.
“At the same time, you’ve got strong migration, so the demand for rentals is increasing. It’s super competitive for applications. And of course, as the cost of renting increases, it’s harder to save to buy a property.”
Dr Mardiasmo said that overall, the Brisbane rental market was “where it should be”.
“I would say to people in Brisbane: look around you. There are other capital cities where people have to commute for an hour-and-a-half just to get to their workplace.
“In Brisbane you only need to live 15 to 20 minutes out to be able to afford a place and still be able to live. We don’t need to wish for figures that make headlines, our situation right now is quite nice.”
- Developments9 months ago
Brisbane and interstate investors drawn to up-and-coming King Street precinct
- Opinion2 years ago
Are we headed for a housing crash — or not?
- Real Estate3 years ago
Brisbane’s 5 most affordable suburbs within 15km of the CBD
- Market Place11 months ago
How to make $1 million ‘flipping’ houses
- Market Place11 months ago
Looking for a property to rent? Good luck finding something here
- Market Place2 years ago
Brisbane real estate: Most expensive homes see growing sales results
- Infrastructure11 months ago
How train lines are driving property prices
- Developments4 years ago
Investors turning to Brisbane