Rob Honeycombe of Bees Nees Realty looks at the local rental market.
Few things are more on the mind of inner-Brisbane property investors right now – where’s the rental market headed? The media clamour for new data and are being fed by property developers and others with an interest in positive spin, along with those “independent” commentators who would like investors to put their savings into another place, and can only see the sky falling on our market.
So here’s our best effort at presenting some facts and observations from on the ground, dealing with tenants and landlords every day.
Supply is up and rents are down. No major news in that, but what’s not often reported nor understood, is the real surge in demand for inner Brisbane rental homes. The Bees Nees property management team recorded 1,041 new tenant enquiries in the past 30 days alone. We are witnessing first hand the extraordinary rise in interest from residents who want to be a part of inner-Brisbane and recognise the changes that have happened. Have a walk around places like South Brisbane, Newstead and Milton and you’ll see whole new precincts of cafes, bars and entertainment. All those new apartment buildings have brought new street level amenity, more things to do, more people around and with that a greater sense of activity and safety.
There’s a buzz around many of these neighbourhoods, an emerging energy, an excitement for new places, and it’s attracting tenants of all ages and household types in from the ‘burbs in big numbers.
So what are the official stats showing? Every new bond is lodged with the Residential Tenancies Authority so their data is as good as it gets. Their September quarter numbers came out this week and show inner-Brisbane’s rents have gone nowhere over the past 5 years. Median rent for a 2 bed apartment is $480 per week – it rose to $495 of a couple of years ago but has dipped again to its 2012 mark. (Interestingly inner-city house rents are also back to 2012 levels after dipping 7% in the past two years).
On face value landlords could rejoice in these numbers. Holding fairly solid on rents while we’ve absorbed such huge supply is remarkable. Except we haven’t seen true rents stay the same, and the typically higher prices of these new apartments are skewing the official data, dragging up the median. When our inner-Brisbane properties become vacant at the moment we’re usually having to reduce the rent to fill them. Comparing apples with apples, rents are down and it is without doubt a tenant market.
Supply across our inner suburbs has risen 11% over the past 2 years, with an extra 4,300 rental homes added since September 2014. That growth has been highly focused in places like Newstead/Bowen Hills (an extra 1,494 homes for a 24% leap in supply), West End/South Brisbane (1,060 dwellings or 16% growth) and Woolloongabba (463 dwellings – up 23%). These are big numbers and would always take some absorbing in this seismic change for inner Brisbane.
We’re out and about finding new tenants for our landlord clients every day, renegotiating new leases for existing tenants, and witnessing all of this first hand across the rental market. And what we know is rents have dropped, in some cases 10% but more often by something like 5%. We know if we set a property’s asking rent at current market then we have strong enquiry. Landlords aren’t happy accepting lower rents and, with rising property costs and mortgages that must be paid, some are feeling the pain. But we’re not witnessing forced sales or any of the mass exodus the dooms-dayers predicted.
People are moving to Brisbane, they’re moving in from the outer suburbs, and regardless of how much we’re told we’ll never fill all these new apartments, we can tell you it is happening. Day by day, week after week, Brisbane is transforming. We know there’s still some supply to come but for the most part the cranes are coming down from inner-Brisbane apartment buildings. There won’t be another tsunami of new homes to come.
For inner-Brisbane property investors we see a growing light at the end of the tunnel. Tenants might do well to secure the longest tenancy they can while rents remain so low.