25 Sep 2020

Tenants compete for rentals in Australia’s regional cities as vacancy rates tighten

Competition over rentals in some of Australia’s regional towns is so fierce that some tenants are offering to pay three months’ rent in advance to secure a property.

Others are applying for rentals before they have even had a chance to look through them in person.

Eleven regional areas across NSW, Victoria and Queensland recorded rental vacancy rates of less than 1 per cent in July, SQM Research data showed, as people left the capital cities for less populated areas during the coronavirus pandemic.

The region with the tightest rental market is in Far North Queensland, where residents face intense competition securing a rental. In Townsville, the vacancy rate was just 0.5 per cent in July.

Northern Queensland, which includes Charters Towers, Mount Isa and Flinders, was a close second with a vacancy rate of just 0.6 per cent. 

There are also very tight rental markets in the Riverina in NSW, which includes Wagga Wagga and Griffith. The vacancy rate in that region was just 0.7 per cent.

It was also 0.7 per cent in the Northern Victoria region – think Bendigo, Shepparton and Wodonga – as well as the Sunshine Coast in Queensland. 

Regional vacancy rates 

REGION

VACANCY RATE

Far North Coast Queensland

 0.5%

Northern Queensland

 0.6%

Riverina NSW

 0.7%

Northern Victoria

 0.7%

Sunshine Coast Queensland

 0.7%

Murray Region NSW

 0.8%

Hunter Region NSW

 0.9%

Central Tablelands NSW

 0.9%

Gippsland Victoria

 0.9%

South West Victoria

 0.9%

Southern Queensland

 0.9%

Source: SQM Research Residential Vacancy Rates July, 2020

SQM Research’s Louis Christopher said there had been significant demand for rental property in regional and remote areas since the coronavirus pandemic, causing vacancy rates to plummet.

“It’s not just to coastal areas but also inland and not just in NSW,” Mr Christopher said. “There’s been a mass exodus of people from the CBD to regional areas in Sydney and Melbourne, and to a lesser extent Brisbane.”

With more people working from home, tenants were moving to lifestyle properties like the Blue Mountains and the Central Coast – which had a vacancy rate of 1 per cent in July.

This is compared to the vacancy rates of the capital cities – Sydney’s vacancy rate was at 3.5 per cent in July, according to Domain data. Melbourne had a 3.2 per cent rate while Brisbane’s was 2.2 per cent.

While the gap in vacancy rates between the cities and regional towns may not seem like much, Mr Christopher said they made all the difference to whether a local market tipped in favour of landlords, or whether tenants had the upper hand.

“It is a landlord’s market in many regional areas,” Mr Christopher said. “But people still want to live near amenities – they still want to be within driving distance of a cafe.”

Domain senior research analyst Nicola Powell said the coronavirus pandemic had accelerated the trend of people moving to regional cities.

“Some people are renting before they buy – a sort of ‘try before you buy’ to see whether a regional move suits them,” Dr Powell said.

Affordability was one of the main reasons for people moving further away from the CBDs, along with living among a smaller population.

LJ Hooker Wagga Wagga leasing consultant Nicole Clark said business had been busy even during the normally quiet part of the year in winter. 

Homes, some advertised for rent for up to $850 per week, were seeing a lot of competition once they were listed.

People looking to rent in Wagga Wagga were offering three months’ rent in advance to try and secure a property, and were also filling in applications for properties before they saw them, Ms Clark said.

“They’re just getting snapped up so quickly even before an inspection is getting booked,” Ms Clark said. “There’s quite a few people competing for properties in good areas like those close to schools or shopping centres.”

Ms Clark said there had been interest from tenants in Melbourne, even though they could not move interstate with border restrictions in place.

Interstate tenants were also contacting director of Harcourts Kingsberry Towers Julia Fraser for rentals in Charters Towers in Northern Queensland.

The rental vacancy rate had been extremely tight in the township as people looked to move to the area from Townsville, where rentals were more expensive.

Some tenants were moving to the area for jobs, including teaching, while others were moving out of home for the first time. 

“There has been a little bit of growth because of the coronavirus,” Ms Fraser said.

While these areas were seeing a boost in the number of tenants, the question remains whether it will continue post-pandemic.

SQM Research’s Louis Christopher said there could be some renters who stayed in regional cities permanently.

“If they can make it work for them, they’ll stay up there. I think that’s what’s likely to happen,” Mr Christopher said.

Opening the national borders would see a boost to CBD rentals as immigration and international students return, he said.

SOURCE: https://www.domain.com.au/news/tenants-compete-for-rentals-in-australias-regional-cities-as-vacancy-rates-tighten-985087/

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