For those who like a snapshot here it is: Brisbane rental supply increased by a record number over the past year as several thousand new apartments were added to the market, yet the latest vacancy rate data shows the number of available rentals is back at a “healthy” level and rents are at an all-time high. So how the heck has this happened?!
Brisbanites, along with many of us who’ve invested into Brisbane property, often underestimate the appeal of this great city and the resilience of its rental market. The stats paint a very clear picture on the once in a generation growth we’re going through. Tower after tower of new apartment buildings have been completed in the past 3 years, and there are more (though a fast diminishing number) still under construction. Yet Brisbane tenants have largely soaked up this new supply.
This city now has 170,000 rental homes, according to the latest data from the Residential Tenancies Authority. That’s grown by over 21,000 or 14% in the past two years. It’s a huge spike. We used to refer to 2004-2006 as our “really busy time” and the benchmark for change, but its 8% jump in rental supply seems sleepy compared to now!
Our inner city suburbs are home to around a quarter of Brisbane rentals yet it mightn’t surprise that they account for almost half our growth. Brisbanites are moving to the city. Or more correctly, the 21 suburbs around our CBD (what the RTA call “city inner”) are adding tenants at a much faster pace than the rest of Brisbane. We see this every day in our property management team, our leasing managers helping tenants move from the burbs. And new arrivals choosing to stay close to our work and entertainment hubs. Every tenant has a story and some do crave the open spaces of suburbia. But from our vantage point it’s like watching a tide that continues to creep in. Streets that were quiet and dull after dark are now filled with apartment buildings, cafes and bars. Think Newstead/Bowen Hills where we’ve witnessed a 62% leap in rental supply in just 2 years. Adding more than 3000 extra tenancies to one small neighbourhood leads to extraordinary change. The Gabba’s had a 58% increase in rental supply; South Brisbane/West End 37%.
It might be too optimistic to simply say, “build it and they will come”. But these three areas have been the breakaway growth pockets of inner Brisbane with seismic changes in land uses, shiny new apartments replacing light industry and low grade commercial property. Planning laws enabled the change and while much of the buyer demand has come from interstate and (to a far lesser amount) overseas, locals were always going to be needed to fill these buildings.
The REIQ’s quarterly measure of vacant homes is one of the simplest indicators, and the graph shows a downward trend for both greater Brisbane and the inner city. The REIQ says each is back in their “healthy” zone, suggesting more balance to the market. The RTA’s March quarter data shows rents back at their highest on record, a 2 bed apartment now $420 per week. We’re just $5 shy of the peak $490 in the inner city too – market uptake defying this tsunami of new supply. To be fair the RTA’s data tracks “new bonds lodged”, and we know this can be skewed by new, more expensive product being added. For properties managed by Bees Nees Realty we’ve typically witnessed small drops in rents over this past year – landlords do need to be competitive to find new tenants – though in patches the trend is now flatter with some small increases creeping back in.
Are we past the worst for Brisbane landlords? There is more supply to come in new apartment buildings – South Brisbane/West End for example has approx 2,300 due for completion over the next year. It’s a slowdown, but still at a fast pace!
Brisbane apartment rents finished down at the end of 2017, the first time in more than two decades median rents actually dropped year on year. Given the extraordinary level of supply that’s not surprising. What has caught out many skeptics is the strength in tenant demand and the rapid uptake of so many new apartments.
Please share your comments on the Brisbane rental market. We’d love to hear what you think…