Brisbane rental market reaches record highs

Brisbane rents are at a record high as tenants hit the limit of what they can afford to pay for housing after years of rising rents.

The asking rent for Brisbane’s median house was $700 in the September quarter and $660 for a unit, the latest Domain Rent Report, released on Thursday, shows.

Rents stalled for both types of property over the past three months as residents slammed into an affordability ceiling. Yet houses cost $40 a week more than last year and units an extra $20. Cheaper outer pockets in Logan and Moreton Bay also copped hikes.

Domain chief of research and economics Dr Nicola Powell agreed both renters and investors were feeling the pinch and noted a mismatch of supply and demand.

“Rental listings have declined compared to this time last year … so it’s still a landlords’ market,” she said.

“With interest rates and growth, maybe we’ve seen an affordability ceiling being hit.”

She said rent growth in the cheapest areas pointed to a lack of housing supply, and she called for more build-to-rent homes, acknowledging that type of housing did not work everywhere and construction costs were high.

Powell said the final quarter of the year is typically the hottest for rents.

“Renters can only stretch so far, so they’re going to cheaper locations,” she said.

“For landlords, we have seen the cash rate move higher so the cost of holding debt has increased for investors, and then there’s the taxation changes.”

Unit rents in the Moreton Bay (South SA4 statistical region), which takes in Strathpine through to the Hills District and North Lakes, climbed 5.5 per cent over the September quarter to $580 a week. In the Loganlea-Carbrook SA3 region, unit rents rose 6.5 per cent to $495.

Brisbane’s vacancy rate remains at a near record low of 0.7 per cent.

“What we’ve seen is the government has scored a massive own goal,” said Avi Khan, principal of Ray White AKG.

“Logan is where Brisbane’s rental pressure lands. We’re the place people come to when they’ve been priced out of the city, and we’re seeing a lot of pressure on the tenants here.

“If some of these changes are not reversed and interest rates are not cooled, we think there’s going to be a property Armageddon for tenants. It’s that bleak.”

The Reserve Bank increased the cash rate to a 15 year-high of 4.6 per cent on September, and the May federal budget wound back property investor tax incentives in a bid to improve affordability for first home buyers.

PRD chief economist Dr Diaswati Mardiasmo agreed renters had hit a ceiling.

“Everybody is stretched to the limit, whether it’s landlords or renters, and that’s why we don’t have a lot of room to move,” she said.

“We’ve gone through such a big rental price hike so quickly and it’s had an impact on what people can actually absorb … that’s why it’s plateauing now.

“Even people with full-time incomes are needing help with rent.

“I’ve got community housing providers telling me we are entering the red zone ... there’s been about a 30 to 35 per cent increase over the past year in the number of people with full-time incomes asking for rental assistance.”

She said more supply would help, but it was hard to make projects stack up and builders were being taken up by infrastructure projects for the Olympics. Modern methods of construction were another solution but government policies, approvals, taxes and bank financing needed to catch up.

“I would say we’re close to the tipping point,” she said.

“And the rent figures alone don’t show this. There are a lot of people hurting, and that pain is showing up in other places.”

In Redcliffe, where median weekly house rents rose 6.6 per cent in 12 months to $650, Place Redcliffe head of property management Troy Bateman said demand had eased at the pricier end but investors were holding tight.

“We’re not seeing a widespread investor exit across our portfolio. Some owners who might otherwise sell are choosing to lease their property for another 12 months before reassessing,” he said.

“Demand has eased slightly compared with last year … our managed portfolio currently has a vacancy rate of 3 per cent.”

Bateman also noted more people moving with parents or combining households to share costs.

“We’ve also seen increases of approximately $50 a week since the budget announcement, although this varies across the portfolio,” he said.

In Logan, Khan said units were flying off the rack, with the average listing attracting between 14 to 16 applications – double the number a year ago.

“We are also seeing a lot of multi families trying to rent together and we’re seeing household sizes getting bigger,” he said.

“We are at a 0.16 per cent vacancy rate at the moment.”

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