A sea-change surge has pushed the Gold Coast and Sunshine Coast rental markets to the brink of breaking with median weekly prices soaring to record heights as industry experts warn the boom that’s left some locals homeless is far from over.
According to the latest Domain Rent Report, both cities recorded their strongest annual growth on record over the year to June, with median house rents now an eye-watering $600 per week in each hub.
Over the June quarter, vacancy rates also plummeted to their lowest in history – a painfully tight 0.4 per cent in both – creating the most severe rental conditions in the country amid reports some businesses are battling to find hospitality and retail workers due to the lack of housing.
Domain chief of research and economics Nicola Powell said that while soaring prices spelled good news for landlords and investors, there was no end in sight for struggling tenants with local wages growth unlikely to support ongoing rent hikes for much longer.
“I think it will get to a point where the rate of rent growth (in both cities) is unsustainable against the backdrop of weekly wages growth and there’s only so long tenants can withstand it. [House rents are] up $100 on the Sunshine Coast and $90 on the Gold Coast. Sunshine Coast unit rents have surged $75 over the past year to a median of $495 a week, while the Gold Coast median unit rent is $55 higher to $485,” Dr Powell said.
“Landlords are clearly cashing in on improved household budgets and increased interstate demand to boost yields … however it does put tenants in a vulnerable position.”
While both cities are no strangers to booms and busts, Dr Powell said the current rental market surge was faster and more furious than any previous ebbs and flows on the Gold Coast and Sunshine Coast, with every new lockdown in the nation’s major southern cities only fuelling the sea-change fire.
“Interstate migration is a big part of the rent rise … and anyone moving from interstate – if they are remote working and keeping a higher paid job – might have more cash to spend on rent, so it’s likely that bidding wars happening right now,” Dr Powell said.
“The other point is that the vacancy rate is tightening … with both of them edging to zero … so conditions are extraordinarily tight compared to other capitals.”
On the Sunshine Coast, Sunshine Beach Real Estate principal Pip Covell said the trickle-down effect of the rental crisis was being felt across the city.
“People are now prepared to pay six or even 12 months of their rent in advance … everyone wants to live here because they have realised they don’t have to live in the big smoke anymore,” Ms Covell said.
“And I think it’s going to continue … but it’s a pity for the locals here. Even businesses can’t get people to work in the hospitality trade because those workers cannot find places to live. The younger ones are being forced further out so this has a real roll-on effect.
“I don’t know what is going to happen … and rentals are popular right across the board. For most people, it’s a case of just finding a home wherever they can.”
While Ms Covell said demand slightly eased across the city’s rental market over the past quarter, she also conceded it was because there simply wasn’t any stock left.
“If you don’t have the goods, you don’t get the inquiry,” she said. “And we’re running on nothing.”
On the Gold Coast, Ray White Surfers Paradise Group property management general manager, Amber Roberts, echoed the sentiment and said the boom on their end was being exacerbated by the fact rental prices on the coast had remained steady for years.
“I have never seen this level of inquiry before … we’re still averaging 10,000 inquiries a month. It was almost like someone pushed the ‘go’ button and everyone said ‘we’re all moving to Queensland’,” Ms Roberts said.
“So, we are in a bit of a crisis. We need more stock and we need more investors … in fact, it’s such a good opportunity for investors right now as it’s really hard to be negatively gearing a property. That gap has even closed at the prestige end,” Ms Roberts said.
“I just listed a property that was being rented for $1100 a week in Sanctuary Cove – on the water – and I relisted it for $1800. I already have multiple people interested.
While Ms Roberts said it was indeed a tough rental climate for locals, she felt the coastal city had been as cheap as chips for years with prices still considerably higher in Melbourne and Sydney’s seaside hot spots.
“We were spoiled for too long … and while the Global Financial Crisis didn’t hit us as hard [as it hit some cities], it went for longer and I think there hasn’t been a huge amount of capital growth in property … so, I’m excited for investors to be finally seeing a return,” she said.
“And to be honest, anything we list at the moment is hot. There’s not a suburb that isn’t performing … and I think that’s because of the last lockdown. There were people on the fence about making the move here because Melbourne came out of having restrictions and it was the same with Sydney. But then it all happened so quickly again and there are a lot of people who are done with it down there now.
“I think we will see another wave and then there will be the international market and students who return.”
But while Ms Roberts is convinced there are enough market factors to keep the rental boom burning, she admitted the tight stock levels were crippling.
“Our vacancy rate is 0.2 per cent … and that’s a record for us. And this just feels like it has become the new normal.”
According to the Domain Rent Report, houses in the Gold Coast suburb of Southport recorded the biggest quarterly jump in the median weekly rent of 9.1 per cent to $600, while on the Sunshine Coast, houses in the Noosa Hinterland were the clear winners after a 7.8 per cent quarterly hike sent the median weekly rent to $620.