Rent costs soar in the wake of record low vacancy rates and the floods making rental houses uninhabitable

Queensland’s housing crisis could drag on for at least a year with rents soaring, vacancies at an all-time low and floods wiping out hundreds of rental properties. SEARCH THE VACANCY RATES

Queensland’s housing crisis could drag on for at least a year with post-pandemic leases soaring, vacancies at an all-time low and tenants scrambling for 12-month leases after the floods wiped out hundreds of rental properties.

Industry leaders have called on landlords of short-term rentals, such as Airbnb and holiday apartments, to offer them for long term lease to ease the demand and for the government to ease up on further rental reforms to encourage investment.

Place director of property management Cathie Crampton says rents have risen across the board about per cent in the past year. Picture: Supplied

The vacancy rate shortage has hit a crescendo with 12,800 fewer residences for lease across Queensland compared to April 2020 when the state was in its first pandemic lockdown, according to SQM Research data.

Even Brisbane’s CBD which was a ghost town during 2020 with 1588 properties for rent in June 2020 – the highest vacancy rate in the state (9.2 per cent) – now has only a third of the stock remaining.

Before the floods hit two weeks ago, Ipswich had a 0.7 per cent vacancy rate and at the southern end of the Gold Coast, there were just 70 residences for lease.

The dearth of rental stock has driven fear into tenants who are now shoring up their futures with 12-month lease renewals, said Place property management director Cathie Crampton.

On average, rents are increasing about 10 per cent with some rising hundreds of dollars and further price hikes are inevitable in the wake of borders, international and domestic, reopening and flood victims needing alternative accommodation, she said.

“The fundamental issue is around supply and demand and it started with interstate migration because there has been no increase of meaningful supply for five years,” Ms Crampton said.

“We’ve increased rents in over 73 per cent of our rent renewals and it has risen from anywhere between $5 and $100 per week, but typically it’s about 10 per cent.”

Flooding in Brisbane and Ipswich has resulted in about 200 Place and Ray White rental properties being deemed uninhabitable. Picture: Liam Kidston

Making matters worse, Ray White and Place collectively removed more than 200 rental properties from their books after they were deemed uninhabitable because of flooding while hundreds of other residences were partially damaged.

“Rents have gone up 20 per cent since pre-Covid and that would be the exception of the CBD apartments where there are still a large number of rental properties,” Ms Sim said.

“People are looking for long term leases and that has been a trend from the beginning of Covid because no one wanted to take six months to see how the pandemic turned out.

“It’s been easy for landlords to agree to a 12-month lease as that is industry standard.”

Ray White property management CEO Emily Sim says tenants are looking for longer term leases to avoid having to search for another property. Picture: Supplied

Although in the main there have been incremental six-month increases in rent, there are units and houses across inner-Brisbane where rents have been jacked up in the past week.

The asking price for a house in Drynan St, Paddington has risen from $900 per week in February 2019 to $1250, while the rent for a two-bedroom apartment in Alice St in the CBD is $1500 after previously being advertised for $1350.

The supply shortage has also been partially blamed on new government tenancy laws that favour tenants and eroded the confidence of landlords and their contractual rights, said REIQ CEO Antonia Mercorella.

They have removed the ability of lessors to end tenancies without grounds, making it unlawful for owners to end a periodic lease with notice and allow tenants to rent with pets among other changes, Ms Mercorella said.

Real Estate Institute of Queensland CEO Antonia Mercorella is calling on owners of short-term letting and holiday homes to offer them for long term leasing. Picture: Supplied

“One of the big reasons owners are not putting their properties up for long term rentals but placing them on Airbnb, is that they want to avoid very onerous tenancy laws,” she said.

In addition, the Government has planned a second phase of reforms involving rent regulations and revisiting land tax laws while the REIQ estimates about 200,000 properties across Queensland are either vacant or listed for short-term or holiday letting.

“We did warn the government about this and now we have had the first phase of rental laws and there is to be a second, owners are saying that’s why they would be leaving the long-term rental market,” she said.

“It’s not the only reason they are leaving, but rental reforms have accelerated it because the short-term market is not governed by rental law legislation.”

CEO of Tenants Qld Penny Carr says the rental vacancy predicament will get worse before it gets better. Picture: Supplied

Tenants Queensland CEO Penny Carr was not convinced rental reforms had scared off landlords and it was the least of the problems for displaced flood victims and the homeless.

“We need to be thinking of short and long term solutions because I have to think it is going to get worse before it gets better,” Ms Carr said.