Rental lift cold comfort in crisis times

A slight rise in the Gold Coast’s critical rental vacancy rate over the last quarter has left industry figures perplexed given the dire state of the housing crisis still gripping the region.

3537 Main Beach Pde, Main Beach

ANALYSIS

A slight rise in the Gold Coast’s dire rental vacancy rate over the last quarter has left industry figures perplexed given the housing crisis still gripping the region.

The Real Estate Institute of Queensland (REIQ) Residential Vacancy Report for the June quarter 2022 shows available tenancies across the region increased marginally, by 0.1 per cent. Vacancy now sits at 0.5 per cent, still well down on the ‘healthy’ range of 2.6 to 3.5 per cent.

REIQ CEO Antonia Mercorella says the stabilising rate could be due to properties in prime coastal locations recently changing hands and coming back to market as rentals.

But it’s cold comfort to those locked out of affordable housing, when the properties being listed for rent are luxury homes where tenants would have to fork out huge weekly sums in proportion to the home’s multimillion dollar price tag.

The Coast’s most expensive rental listing

The Gold Coast’s most expensive rental listing this week was an absolute beachfront four-level home at Main Beach that was previously rented for $7,000 a week.

The home sold for $9.8m last month via Amir Mian Prestige, and forms part of a multimillion dollar investment portfolio owned by Queensland’s richest dentist, Daryl Holmes.

Mr Holmes reportedly pocketed close to $70m from the 2021 sale of his 1300 Smiles business.

Edward Smyth and Blake Farquhar, of Collectiv Asset Management, are currently negotiating a lease on the swish digs with an international tenant who will also cough up $30,000 bond.

Mr Smyth condedes homes like this were well out of reach for the average hopeful tenant.

“The luxury market tends to move in offmarket circles, having the greatest success securing tenants who are either internationally based or expats,” Mr Smyth says.

“The higher-end luxury market moves in different circles to the lower and medium-priced segments of the rental market.”

Edward Smyth

Traditionally, it’s been the unit market that’s provided a good share of affordable housing options on the Gold Coast, but latest Urbis data shows the pipeline of projects is shrinking amid a deepening construction crisis.

The Gold Coast figures show a steep decline in new towers compared to before the pandemic, as the industry grapples with huge price hikes, material delays and labour shortages.

The figures show just 75 apartments have been built this year along the coastal strip, as well as Robina and Varsity Lakes, with a further 2,646 currently under construction.

Next year, another 1,932 will be built.

By comparison, 4,352 units were built in the two years prior to Covid hitting in 2020.

Urbis director Paul Riga says a healthy forward supply was a crucial factor in addressing housing affordability and alleviating the crushing rental crisis.

“The supply of apartments to be delivered over the next two years is well short of where we were in 2018 and 2019,” Mr Riga says.

“If we are delivering less than half of the apartments we were, there are potential impacts of affordability and on our rental market as well.”

Gold Coast tower supply is dwindling

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Huge demand from owner-occupiers over the pandemic saw new product geared towards the luxury market as investors cashed out, again leaving slim pickings for renters most in need of a roof over their heads.

“Delivery of apartments in 2022 was much stronger on the Gold Coast than in Brisbane, primarily driven by the premium and owner-occupier markets,” Mr Riga says.

“The fact that population is still growing but supply is declining while we’re already in the midst of an affordability and rental issue resonates, where the product that’s coming through and will be delivered over the next two years is very much owner-focused and not necessarily product that’s open to renters.”

REIQ CEO Antonia Mercorella

REIQ CEO Antonia Mercorella says the region’s ongoing “wafer-thin” vacancy rates were pushing out families as well as essential workers.

“Real estate agents have reported that incredibly tight vacancy rates are making it tough for hospital workers, teaching staff, and students to find a place to live in proximity to their essential work or study,” Ms Mercorella says.

“These people bring skills and spending to the region, all contributing to the economic prosperity and social fabric of the area, and it’s a truly concerning loss to these communities when they simpy cannot house them.

“What we need now is creative solutions to breathe life back into our flatlining vacancy rates and a genuine long-term plan for housing our population now and into the future,” she says.