Rental markets ebb and flow like other sectors of the economy. They’re affected by a number of macro factors, including economic indicators, interest rates, local builder activity, regulations affecting supply and demand, zoning laws, and infrastructure. These factors are varied and largely out of the control of property investors.
Some Brisbane property owners have found themselves in one of those times when the macro factors can feel like headwinds. At times like these, it’s helpful to focus on the micro factors – the factors that you do have control over. In fact, property investors who position themselves well during less than ideal markets can launch their future successes that will be realised when the macro factors once again go their way. In the case of the Brisbane property market, there are some extremely positive signs to look forward to.
Let’s take a look at a few characteristics of the current Brisbane rental market and what you can do as a property owner to position yourself well to take advantage of this growing market.
As of September 2017, Brisbane vacancy rates were 3.2% – slightly above the equilibrium level of 3%. What can you do to reduce the likelihood that you’ll have a vacancy at any given time?
Firstly. you could use research to invest in a relatively low supply region and in an asset that appeals equally to owner occupiers and investors.
Second, you can improve your property. This not only helps reduce vacancies, but it may even increase the value of the home, giving you more equity in the future. You could address the outdoor living space, renovate kitchens or bathrooms, or upgrade appliances and other features.
You can also reduce your vacancy rates by improving your marketing and application process. Some property owners reduce or eliminate the application fees so they have more tenants to choose from. Others create websites complete with video tours to reach more prospective tenants.
Rental yields across the country have softened over the last 24 months, and so too have interest rates. While you may be achieving a lower rental amount, you’re likely to be paying less interest. These two forces have balanced each other out so that the cost of owning a property has remained relatively unchanged since 2015.
In the few years after the GFC, access to cheap credit and state governments eager to stimulate their economies through construction resulted in an increase in dwelling supply. You wouldn’t find it difficult to find a recent headline warning of an oversupply in our capital city markets. Those headlines fail to neglect to important facts:
- The number of apartment approvals in Brisbane has fallen by more than 75% in the two years to March 2017.
- Demand is increasing: Brisbane added 10,149 additional residents from other parts of Australia in 2015/16. In addition, Queensland added 100,000 new jobs in the year ending September 2017.
In 2018 and beyond, decreasing supply and increasing demand will likely have a positive impact on Brisbane’s property market, both in terms of sales and rentals.
For more information about the Brisbane rental market, or to discuss any other property investment topic, reach out to us at Full Financial Services.