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Brisbane landlords are now back in the driver’s seat, with asking rents holding at record high prices, new data shows.
The median asking rent for houses increased from $400 a week to $410 in the December quarter, lifting for the first time in nearly three years – and the latest Domain Rental Report released on Thursday showed those prices continued to hold strong over the first quarter of 2019.
It’s the same story for units, with the median weekly asking rent not going up over the quarter but it did record a slight rise since the same time last year. The median weekly asking rent for a Brisbane unit is now $380, up $5 a week from March 2018.
It’s great news for Brisbane landlords, potentially signalling the end of what had been a tenants’ market for a number of years.
“Greater Brisbane’s rental market is slowly changing to favour landlords, with rents rising and yields improving,” Domain senior research analyst Nicola Powell said.
“We know what Brisbane went through was a period of heightened rental supply, thanks to that development boom, but that stock is now being absorbed because the boom is over.
“Added to that is Brisbane’s relative affordability and rising job prospects, which continue to draw residents from interstate. Major infrastructure projects are set to inject significant economic benefit through job creation and spending in the coming years.
“So Brisbane tenants are going to find the rental market is entering new territory. Because the stock is shrinking, the competition to get rentals will increase.”
But Dr Powell said the pendulum would not swing in landlords’ favour overnight.
“Look, it’s not going to be an instant turnaround for landlords, they’re not going to suddenly see soaring rents — but what we know is that tenants are already finding the choice is narrower,” she said.
“It’s going to be a slow burn as that stock gets absorbed … but all signs point to a tightening of the rental market.”
Brisbane rents may be on the rise, but it is still one of the cheapest capital cities in Australia to rent a house or unit, even coming in more affordable than Hobart for houses.
Only in Adelaide and Perth is it cheaper to rent a house or unit.
The Gold Coast remains Queensland’s most expensive place to rent, with a median rent of $500 a week for houses and $430 a week for units. It’s also one of the tightest rental markets in the state, with a lack of supply continuing the drive in price increases. Houses and units are up 2 and 2.4 per cent respectively over the year.
“The feeling is definitely that good quality product is certainly leaning in the landlord’s favour now,” he said.
“If it’s a nice, spacious unit or a well-renovated home, there are several people turning up to open homes and making their applications more attractive to secure the tenancy.
“However, what we are still seeing is that units of a smaller dimension built by the developers with the intention of maximising profits are still not renting well at all.
“My feeling is that that is holding the whole market back — the rest of the market is performing as well as I’ve ever seen it.”
Mr Hockings said most of the smaller, cookie-cutter units that developers targeted at investors had not recovered from the rental price falls from a few years ago, which had a flow-on effect to better properties.
“That’s a style of product in particular that is going really poorly. They haven’t recovered yet,” he said.
“What that means is that, even when you’ve got a really nice quality unit, tenants are still of the opinion that it’s ‘their market’, so they’re still going hard negotiating with the rent, simply because they’re used to it.”
However, Brisbane’s rental yields remain some of the strongest in the country, with units achieving an impressive 5.23 per cent.
Houses are yielding 4.61 per cent, one of the highest yields of any capital city in the country.
Dr Powell said the tightened supply and increased demand from interstate migrants would continue to put pressure on the market, eventually driving up prices and yields.
“The federal budget’s infrastructure focus, which includes the announcement of fast rail connecting the Sunshine Coast, and the Gold Coast, to Brisbane, will help to boost local confidence, attract interstate residents and place additional demands on the rental market,” she said.