- Investor loans increased, likely indicating a shift from owner occupier dominance
- Queensland was a stand out rental market throughout the pandemic, and continues to be so
- Rental market continues to be tight, with incoming overseas university students likely adding pressure
A shift from owner-occupiers to investors is likely to have taken place, and a sustained shift ‘up North’ was observed in Herron Todd White‘s latest Month in Review for March 2022.
Some of the factors to be mindful of included the increased rental increases, house prices that simply won’t take a much-desired holiday like the many of us, and what seems an imminent increase net in net migration into Australia.
Investor appetite whet by increasing rents
Herron Todd White’s Executive Director, Valuation & Advisory, Drew Hendrey, recalled Australian Bureau of Statistics (ABS) February 2022 Lending Indicators report, where new investor loans were found to have increased by 2.4 per cent to a “record high of $10.3 billion in new loan commitments.”
“This suggests a significant shift in purchasing activity occurring from owner occupiers to investors as they look to capitalise on strong returns driven by some of the largest rent increases the market has seen in years,” wrote Mr Hendrey.
He added that housing affordability remains an issue for many, with “… an increasing number of people … moving away from buying and into renting.”
Tree-change or SEQ-change?
While uncertainty remains over how sustainable the regional housing and rental demands will be, many Australians are looking to move ‘up North’.
No, it isn’t a typo with the Q and A being close to each other on the keyboard.
Southeast Queensland has been a star performer throughout the pandemic, and that momentum seems to have carried over to this year.
“Southeast Queensland continues to outperform other markets in terms of demand for rental properties on the back of continued strong interstate migration and limited available stock. This is driving strong returns and low vacancy rates,” wrote Mr Hendrey.
He also noted the rental demand across Brisbane, Sunshine Coast and Gold Coast “… can be attributed to the severity of lockdowns in Victoria and, to a lesser extent, New South Wales.”
Significant increases in rental property demand occurred in the final quarter of 2021, Mr Hendrey wrote this coincided with the reopening of state borders.
He also noted that with Melbourne and Sydney seeing a gradual return to offices and the CBD, rental markets in the regions surrounding those cities may see some relief.
“The return to office in some form for many businesses could place pressure on personal housing decisions some made in the heat of the moment during lockdown. This may result in increased rental stock in regional markets surrounding capital cities, with the outcome being softer asking rents to keep vacancy periods limited.”
Drew Hendrey, Herron Todd White’s Executive Director, Valuation & Advisory
In contrast, the Queensland shift “… seems more sustained,” said Mr Hendrey.
“I expect the Queensland market to continue seeing strong demand for rental properties as those who move there secure short-term accommodation while looking to buy… or those already living there get priced out of their desired suburb and become renters.”
Shortage woes: It’s not over yet
As borders open there’s one thing that will put more strain on the rental sector: migration.
As international university students begin returning to Australia following the resumption of in-person classes and open borders, along with other forms of migration, additional pressure will likely be seen in the rental sector.
The already low rental lock “… is due to the number people either returning to Australia from overseas, or from those looking to relocate here on the back of our low case numbers and excellent health system,” wrote Mr Hendrey.
It seems the housing sector, no matter where you look, remains in a fragile state of flux.