VACANCY rates for new Inner Brisbane apartments remained tight at 2.3 per cent over the December quarter 2016, says new research released today by property consultants, Urbis.
The Urbis Inner Brisbane Apartment Rental Review also found that new developments are out-performing older, established projects with lower levels of amenity.
The Real Estate Institute of Queensland (REIQ) reported a higher vacancy rate of 3.6 per cent for the total Inner Brisbane rental market over the same period.
Urbis Associate Director of Property Economics and Research Paul Riga says that the indicative vacancy rate of 2.3 per cent for new apartments is a slight increase on the September quarter 2016, which recorded 2.2 per cent.
"Given that 2016 has seen the highest number of new apartments to ever settle within Inner Brisbane, this is a positive result," says Riga.
Choice, location and competition is key
Increased choice, competitive rents and desirable locations are driving renters' movements
The report, which surveys 23 projects containing over 4,000 apartments, found that close to 50 per cent of renters in the new projects had moved from middle and outer precincts of Brisbane.
The Middle Ring (5-20km) and Brisbane Local Government Authority recorded vacancy rates of 3.3 per cent and 3.4 per cent respectively (REIQ).
Riga says: "These vacancy rates are expected to rise as the trend for new apartments attracting residents from the outer areas into Inner Brisbane continues".
Average rental yields falling as competition increases
While vacancy has remained tight, the competitive nature of the Inner Brisbane apartment market has driven softening rents over the December quarter, resulting in a decrease in average rental yields.
Building managers have also reported that new buildings are taking longer to reach full occupancy.
However, well-located, high-quality buildings with strong amenity are largely unaffected, recording little rental price decreases and have seen minimal 'renter churn' with renters happy to stay on despite new projects available around them.
Inner Brisbane apartment rental market beginning to self-regulate
There are indications the Inner Brisbane apartment rental market has begun to self-regulate.
Positive absorption of new apartment rentals is evident through the 24 per cent increase in bond lodgements for the December quarter, compared to the same period 12 months prior, based on Residential Tenancies Authority (RTA) data.
The growth in bond lodgement is expected to continue over the next 12 months, boding well with a declining level of new apartment supply coming to the market. Additional research from Urbis indicated that new projects launching were significantly down on this time last year.
"The continued decrease in future apartment supply will give the rental market time to absorb new apartments," says Riga.
Business News Australia
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