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The Mackay rental market has roared back and is firmly in recovery with employment driving the rebounding rental and sales market.

The vacancy rate has eased, moving from 0.9 per cent to 1.7 per cent according to the REIQ.  It remains a tight market.

The Fraser Coast market continues to show signs of strengthening with a tightening of the vacancy rate from 1.4 per cent in the September quarter to 1.2 per cent in the December quarter. The surrounding region is similarly improving. Hervey Bay has tightened to 1.0 per cent, making this the tightest rental market in the state. Maryborough has also tightened to 1.6 per cent, down point four of a percentage point from 2.0 per cent.

The Bundaberg region’s jobs market is yielding improvements to the rental market with a further tightening, down to 2.0 per cent. This market has followed a steady downward trend from the March 2017 quarter result of 4.6 per cent. While the rental market has improved, the sales market is holding steady, with the annual median sale price remaining static for the past 12 months. It is our expectation that the sales market will likely show signs of improvement, if the job market is secure with workers able to secure finance for housing purchases.

In Gladstone the market did ease fractionally, by 0.1 of a point, moving from 4.1 per cent to 4.2 per cent. However, this market has demonstrated stability and steadiness and while it would be desirable to see that vacancy rate fall further, it has improved considerably from 2017, when this market hovered stubbornly at 5 and 6 per cent. Local agents report that confidence is returning to the local economy and we are optimistic that this market has turned a corner. We hope to see improvements in the sales market soon

The Rockhampton rental market continues to tighten. This market moved from 2.3 per cent in September to 2.0 per cent in the December quarter. We are encouraged that this market is improving in a consistent manner. It has been steadily tightening from a very weak 8.6 per cent in March 2017 to a tight 2.0 per cent in December 2018.

The December quarter vacancy rate in Townsville eased to 4.3 per cent. In January this market suffered devastating floods and this will impact the rental sector for some time to come. With an unknown proportion of the rental market impacted by the floods, and the number of displaced people needing immediate short-term accommodation also unknown, it’s difficult to measure the impact of this event on the market.

To date, we have not received any evidence of widespread rent gouging, despite some tabloid media reports to the contrary according to the REIQ.

While remaining a tight market, the Cairns market eased fractionally from 1.4 per cent to 1.7 per cent. This market still offers some of the best yields for investors, at around 5 per cent.

A combination of factors is triggering investor nervousness in the Queensland rental market and we are seeing a slowdown in investor activity.

The Sunshine Coast SD, which combines the Sunshine Coast LGA and Noosa Shire, has tightened and is now firmly classified a tight rental market.

The vacancy rate has dropped from 2.4 per cent to 1.8 per cent.

These tightened conditions will continue to exert upward pressure on prices and it is likely we will see some movement in rents if these conditions continue according to the REIQ.

Local agents in pockets of the southeast corner are reporting falling sales volumes, attributable to the perfect storm of real estate headwinds of tightened lending criteria, the legislation review, and the pending federal election.

As federal election campaigning begins to ramp up uncertainty around potential negative gearing adjustments and capital gains tax changes have caused many investors to hit pause on possible buying activity.

The REIQ is hearing from agents that financing is causing contracts to fall over. We’re seeing tightened lending restrictions slowing both investors and first home buyers from getting into the market.

The State Government’s ongoing review of the Residential Tenancies and Rooming Accommodation Act is adding to the unease, particularly given the types of changes introduced in Victoria following a similar review of its rental legislation. Investors are concerned about a loss of control over their asset and worry about unwieldy legislation that will reduce their rights while ramping up concessions to tenants.

Stats At A Glance:

• Tightest Vacancy Rate: 1.0% (Hervey Bay)

• Weakest Vacancy Rate: 5.9% (Cassowary Coast)

• Biggest fall: -3.2% (Redlands, 4.8% in Sep Qtr to 1.6% in Dec Qtr)

• Biggest rise: +3.1% (Gold Coast, 1.7% in Sep Qtr to 4.8% in Dec Qtr)

By Michelle Price