The latest rental stats are out and they paint a picture of a tense market for Brisbane’s inner city landlords and tenants. The March quarter saw some new benchmarks set with record rents – in the CBD and Spring Hill the median 2 bedroom apartment has now hit a landmark $500 per week. That’s a lot of bucks no matter how you slice or dice it.
But interestingly across the inner city median rents actually dropped $5 this past quarter as landlords seemed to have shown surprising restraint with their rent rises. Our experience on the ground suggests some landlords are cautious about rising interest rates and the economy generally, so they’re opting for the safety of keeping a tenant they know, even if they’re not up to full market rent.
The bond lodgement stats support that, with the number of new bonds for 2 bed apartments lodged in the March quarter down 11% on the same time last year (21% in the CBD). Tenants of course are staying put, laying low and hoping for some thanks for paying their rent on time. We were recently asked if landlords ever recognised “good tenants” any more, but the truth of course is with such a tight market most renters are careful to keep payments up to date and look after the place.
Where to from here? We still don’t see the supply of properties improving, and without this rents will continue to grow at annual percentages comfortably in the double figures. Brisbane’s inner city has almost 30,000 rental homes but in the past year we added just 75 to that pool. Yes, 75 in total… According to the latest home loan stats investment finance dropped 9.5% (February 2008) and despite the recent completion of a couple of new towers in the CBD (approx 700 apartments in “M on Mary” and “Evolution”) few new cranes are heralding any major construction. The house market is no better.
Tenants still have a choice and many are moving further out to save rent, with the lifestyle lure of the inner city strong but not at any cost. Landlords can’t take the growth in their rents for granted. But what this year’s first stats do show is a market rebalancing itself and likely to now push ahead to even higher rents as landlords regain confidence and seek to cover increased costs.
How important is a good tenant in the overall return to a property investor? We’d like to have your view.