The inside story on the rental market
As is often the case there’s more to the story than sensationalist headlines would have us believe. Yes there are some large rental increases taking place across inner Brisbane homes: our biggest single jump for an apartment has been 13% or $50. That sudden jump can be hard to cope with and there’s no doubt tenants are feeling pressured by the rises. But the latest RTA stats paint a picture of a market that’s hot but not boiling.
In the December quarter the median rent for a 2 bedroom apartment in the inner city was $360, with no increase on the September quarter. It was up from $320 a year earlier and $290 in December 2004 so tenants do have to find extra $70 in rent compared to two years ago.
Some pockets have seen stronger rental rises. A two bed apartment in postcode 4000 (Spring Hill and the CBD) jumped 19% over two years, despite the total supply of rentals in that area surging by an extraordinary 1,400 new homes. On the flip side some suburbs have barely moved, with New Farm and surrounds for example recording only a modest $30 gain in median rent.
Over that same period landlords have seen official interest rates rise a full percentage point and for those investing now they’ll pay almost 11% more to buy an apartment in the CBD for example, than they would have in 2004. Council’s annual water rates are reportedly set to jump $240 (a 68% increase) and very few landlords can recoup this cost. If real estate agents are not looking for and getting rent increases, their landlords’ returns on their investments are clearly declining.
At the coalface we’re seeing very strong demand for properties less than $350/week and no sign of new supply. The middle to upper market seems reasonably well catered to: we recently had one apartment at $475/week vacant for three weeks. Enquiry across the board is very solid and our landlords are often getting to choose from a handful of applications. But while new supply is sorely needed, especially in the lower markets, we’re yet to see the regular bidding wars between tenants that some media seem to believe are everyday occurrences.