Toowoomba rental market squeeze soars as low vacancy rates and limited supply push rents skyward

Rents have been rising across the board over the past 12 months throughout Toowoomba. These are the factors that have been sending your rent through the roof.

Low vacancy rates, limited supply and an ever-growing demand has seen Toowoomba’s rental market reach boiling point.

Analysis by property researchers CoreLogic has revealed rents across the Toowoomba region have risen at an annual pace of 8.3 per cent, adding more than $1800 to annual rental payments from tenants.

The data also shows a persistent downward trend in vacancy rates has pushed the cost of renting a house 10.3 per cent higher over the past year and renting a unit 6.1 per cent higher in the same period.

Rental market data has found units in Rangeville have seen the strongest annual growth, with an increase of 11 per cent over the past 12 months, to a median rent of $320.

Houses in North Toowoomba-Harlaxton recorded a median rent of $370 and an annual growth of 10.9 per cent.

The lowest annual growth of rent was in units in Toowoomba Central, with a median rent of $296 that has seen a 6.6 per cent increase in the past 12 months.

Table of rent growth in houses and units in Toowoomba in the past 12 months.

CoreLogic research director Tim Lawless said rising rents presented a challenge to people looking to enter the property market both as renters and buyers.

“We are seeing rents rising really quickly as well as house values, so for people unable to get into the housing market affordability is becoming more challenging in both avenues,” he said.

“The trend is expected to worsen from here. There’s no expectation wages will surge higher, and rents on average have risen more in a few months than average wages have in a year so affordability will be on the radar.”

CoreLogic research director Tim Lawless.

According to the Toowoomba Region Building and Development Activity Report, released in April 2021 by Toowoomba Regional Council, vacancy rates have been “very tight” since 2017.

“Rents are widely forecast to increase during 2021 while vacancy rates continue to be extremely tight and well below the balanced market level of three per cent,” the report states.

“Vacancy rates across Toowoomba (postcode 4350) were approximately 0.7 per cent as at February 2021, which is considered very tight and well below the balanced market level of three per cent.

“Vacancy rates have been trending lower since the beginning of 2017 and have been sub one per cent since June 2020. This trend has been observed right across regional Queensland, due to a range of factors including low levels of construction and investor activity in recent years, compounded by changes in internal migration patterns during the pandemic.”

The Toowoomba suburb of Rangeville has seen the strongest growth in rent over the past 12 months. Photo Kevin Farmer / The Chronicle Helicopter services courtesy of Heliwest Group

While people moving to the region has had an impact on tightening the rental market, RealWay head of property management Grace Hilder said other factors had more to do with the low vacancy rates.

“The sales market is so strong at the moment there’s a lot of people selling their investment properties and they’re being bought by owner-occupiers, so that’s taking supply out of the rental market,” Ms Hilder said.

“The other thing is that within the building industry there’s a lot of grants for first time builders and they’re building houses to live in, so supply isn’t increasing that way either.

“The main thing we’ve found contributing to the high rents and low vacancies is a lack of supply. There’s quite a bit of movement on our end of people choosing to sell their investment properties and the tenants are being sent on their way, but the problem is they’ve got nowhere to go.”

Ms Hilder said in the past 30 days, their office processed 11,000 inquiries for just 325 properties.

“In total our agency has a vacancy rate of 0.6 per cent, there’s so many people looking but there’s not enough property to put them in,” she said.

“This is definitely the strongest I’ve ever seen the rental market in my 14 years in the industry.

“Last week alone we rented four properties off the market without even advertising, and I had seven friends contact me, and I just couldn’t help them. It’s pretty tough out there at the moment.”

Originally published as Toowoomba rental market squeeze soars as low vacancy rates and limited supply push rents skyward