This Brisbane Buyers Agent needs to tell you about the continued rent growth in Brisbane/SEQ and how you can benefit from this as an investor. Supply is not keeping up with demand in our market, with vacancy in many suburbs around 1%, leading to significant rent growth and yield-on-cost growth for well-selected assets.
Main Market Drivers Causing Rental Growth
- Supply constraints persist — ongoing construction cost pressure and limited labour, along with weak below long-term new approvals is causing the housing/unit pipeline to remain weak and below demand. This is evidenced by rental vacancies remaining around circa ~1% statewide (healthy market 2-3% vacancy), which is causing upward rent pressure.
- Demand remains strong – continued migration and population growth means available stock is quickly absorbed. It’s not uncommon for rental properties to receive 10+ applications to lease from prospective tenants. With monumental rental growth to Brisbane suburbs over the last 5-years, there is a definite trend of rent growth in mid to outer ring suburbs from the Brisbane CBD due to their relative affordability compared to suburbs closer to the CBD, without sacrificing on infrastructure and amenity. In fact, some suburbs in Ipswich, Moreton Bay, Logan, etc have seen 10%+ growth to rents in the last 12-months. Furthermore, inner to mid ring townhouses and units continue to surge in rent growth with population growth and lifestyle preferences of many modern buyers shifting from the traditional house with a yard and picket fence to a unit, or townhouse with great proximity to parks, cafe’s, shops, schools and other lifestyle amenity.
Where to Focus?
- Houses in Satellite cities like Ipswich, Coomera, North Lakes, etc. of over 10% in the last 12-months, in fact A number of mid to outer ring suburbs from the Brisbane CBD have seen rents surge in the last year, particularly when those suburbs have easy access to infrastructure and amenity like public transport, schools, shops and hospitals. These locations have emerging local economies with residents able to live/work/play within the suburb’s borders. Suburbs such as Booval (11.1%) and Raceview (11%) in Ipswich an example of this trend, as is Ferny Grove (14.6%). Regionally, Bundaberg rents continue to surge off the back of the multiple infrastructure projects underway and strong lifestyle features. Suburbs close to the CBD, an easy drive to the beach and future hospital like Svensson Heights house rents have increased by over 11%.
- Near CBD units – 10-years ago the Brisbane market was over-saturated with unit stock. COVID changed a lot, construction prices have and continue to rapidly rise, as does land prices. Consequently, developers find it increasingly difficult to stack new unit and/or townhouse developments. This has caused a significant undersupply, matched with a rapidly growing population across SEQ and shifting lifestyle preferences of modern buyers to remain close to the CBD have seen unit rents continue to surge! In particular, older walk-up brick unit complexes are selling like hot cakes. The old ‘six-pack’ style unit complex enables owners a greater share in the complex compared to the massive unit developments, as well as providing owners lower body corporate rates as there are no pools, lifts, gyms, onsite managers etc. to pay for. Locations with strong lifestyle amenity and proximity to the CBD have and will continue to perform strongly, such as Lutwyche (12.7%), Toowong (12.5%) and Morningside (10.2%) growth to rent values in the last 12-months are an example of suburbs close to the CBD, universities, hospitals, shops, schools, parks, etc with strong lifestyle characteristics highlight this trend.
Why Invest Now
- Yield-on-cost growth – expected continued rent rises lift cash yields over time & your returns on investment as rent continues to grow. A Brisbane Buyers Agency like GeoBuyers can help you identify ways to increase rent from improvements too!
- Replacement cost support – construction costs remain high, underpinning existing values as cost of new builds remains prohibitive for developers.
- Limited long-term supply – weak new supply favours current investors as buyers compete for limited stock.
Overall, we believe it’s a great time for investors to purchase in SEQ and enjoy the regions golden decade in the lead-up to the Olympics. There are some locations that are better than others, which the above rent growth trends suggest. Contact GeoBuyers Property today at property@geobuyers.com.au, or 0421 866 949 to see this Brisbane Buyers Agency can unlock some of the hottest opportunities in the market for your portfolio!