A SURPRISE surge in tenant demand for apartments combined with falling interest rates and rising rents looks set to lure property investors back to the Brisbane market after years in the doldrums.
The apartment rental squeeze is getting so tight some agents are now advising prospective tenants to submit applications before they have even inspected properties — or risk missing out.
At the same time rents are on the rise due to a combination of interstate migration, steady economic growth and a decline in new apartments coming to market.
A new report from independent consultancy Urbis has found tenant demand for new inner Brisbane apartments jumped in the first quarter of this year.
The survey revealed a vacancy rate of just 1.6 per cent across 22 apartment projects in inner Brisbane — tightening 0.6 per cent from the previous quarter.
The rebound in the rental market after years of apartment oversupply has even surprised experts, who say the level of demand is greater than expected.
Place Advisory director Lachlan Walker said it was a good time for investors to be researching the market and looking to buy.
“I’m surprised the rental market has recovered so fast, and even more surprised supply’s dried up so fast,” Mr Walker said.
“That’s the one thing that’s held Brisbane back these last three to four years — the high level of supply — but that is quickly disappearing.
“I think we’re in for a supply shortage over the next six to nine months … that’s why we’re seeing some rental growth and vacancy rates starting to drop.”
It comes at a time when borrowing money has never been cheaper, with interest rates being cut to an all-time low of 1 per cent this week.
Independent real estate group Position Property has a vacancy rate of less than 1 per cent on its 800 rental properties in the Brisbane region.
Position Property director Richard Lawrence said property managers in some areas were advising people to submit rental applications without waiting until they had seen the home.
“We are seeing a general tightening in the rental market across the board, including in locations previously reported as having excess new apartment stock available,” Mr Lawrence said.
“This is the case both in inner city locations such as South Brisbane and Newstead, and out to middle ring suburbs such as Chermside on Brisbane’s north side and Upper Mount Gravatt on the south side.”
Mr Lawrence said the situation was likely to intensify in the months ahead given the expected fall in the number of new apartment projects starting construction, leading to a reduction in availability of high quality apartments.
“Anyone currently renting should seriously consider purchasing a new apartment if they can afford it as they will likely be paying higher rents within the next 12 months,” he said.
“Similarly, local investors who may have been sitting on the sidelines can now buy with greater confidence knowing that there is an abundance of tenants available for the right property and rental yields are strengthening.”
The pipeline of new infrastructure coming to inner Brisbane, including Brisbane Metro, Queens Wharf and the proposed South Bank redevelopment, is encouraging new buyers to choose new apartments over established houses.
A new luxury apartment and townhouse development at Newstead, Newstead Series, has put up the no vacancy sign with leasing agent Jones Lang LaSalle reporting a waiting list of people seeking one and two bedroom apartments.
There is a waiting list for the luxury Newstead development, Lucent Gasworks, and in South Brisbane, the first stage of Pradella’s SkyNeedle Apartments also has a zero vacancy rate and a waiting list of prospective tenants.
“I believe we have reached a real turning point where the Brisbane property market is returning to normal supply and demand conditions,” Mr Lawrence said.
“Smart investors who purchase apartments in places where couples, young families and downsizers want to live will reap the rewards in terms of achieving higher rents, good quality tenants and low vacancy rates.
“New arrivals from interstate who might normally opt to rent for a few months to get a feel for their new city would also be well advised to consider buying instead to avoid the tougher rental market conditions ahead.”
Urbis property economics and research director Paul Riga also said interstate migration had played a part in the increase in demand for rentals.
“Anecdotal feedback from participants indicated that inquiries from interstate remained solid, and certainly up from the same time last year,” he said.
“Apartments provide these tenants the flexibility of being able to settle into employment and get to know the city and it’s different precincts.”
Source: realestate.com.au
