- Over the past twenty years, rental supply and demand generally held an equilibrium
- Supply has declined while internal migration is on the rise
- Property investor activity remains low
Brisbane’s rental market is set to tighten even further with property market research firm and buyers agency Propertyology warning that anticipating rents for typical Brisbane houses may increase by $5,000 before the end of next year.
For much of the last two decades, the rental supply in the Queensland capital generally held an equilibrium with demand. Subsequently, the price rents remained flatlined.
However, this is set to change dramatically.
“There were only 4,520 residential dwellings advertised for rent across Greater-Brisbane at the end of June 2021,” explained Simon Pressley, Propertyology’s head of research.
“That is a massive reduction from 9,222 dwellings 5-years earlier, when 230,000 fewer people lived in Brisbane.”
“Pressure was slowly starting to build on Brisbane’s rental market about a year before the arrival of COVID-19. And then the psychological and financial impact of the germ prompted an increased desire for some households to want to move.”
Simon Pressley, Propertyology head of reasearch
Mr Pressley added that this situation is married across Australia – arguing a “perfect storm” is brewing due to insufficient rental supply when a higher-than-normal volume of tenants are seeking new property.
“The high volume of tenants searching for rental accommodation is akin to seagulls fighting over a chip.”
Over this year already, advertised rents have increased from $475 to $515 for Brisbane houses, according to Propertyology data.
“The lack of rental supply is a concern. It is highly possible that Brisbane’s advertised rents could increase by $100 per week – a $5,000 annual hit to household budgets before the end of next year.”
[Select part of the chart to zoom in on various years, and ‘reset zoom’ button to return]
SQM Research backs Propertyology’s data, also showing a significant rise for asking rents this year.
Although the total population of the recently announced 2032 Olympic city increased by 30,000 last year – below the 50,000 increase that is normally witnessed – internal migration remains high with Brisbane net gaining 13,000 residents from other states and territories, similar to previous years.
On top of this, investor activity has remained low, which Mr Presley argues is due to changes in the property investor landscape since 2015 including unpredictable tax policy changes, new state government rental legislation and restrictive credit policies.
“We should never forget that investing is a discretionary action which involves a preparedness to assume risk. Without investment there is no rental supply,” he concluded.