Article: Rental market tight in wake of floods

Rental market tight in wake of floods
http://www.theaustralian.com.au/business/property/rental-market-tight-in-wake-of-brisbane-floods/story-e6frg9gx-1226042446339

JANUARY’S floods in Brisbane and Ipswich had only a short-term effect on the southeast Queensland rental market, but the lack of new housing coming on to the market is leading to tighter competition for existing properties.

Figures issued by the Real Estate Institute of Queensland yesterday show that the vacancy rate for Brisbane’s rental market was 1.8 per cent for the six months to the end of last month, a big drop from the 2.6 per cent recorded in the six months to the end of last September.

While the January floods affected the prestige Brisbane riverfront property market, they also hit the rental markets in less affluent areas, some not directly on the Brisbane River.

Residential Tenancy Authority figures show that demand for three- and four-bedroom houses increased after the floods, while the two-bedroom unit rental market remained relatively stable.

But in general, agents are now reporting that the rental market has begun to return to normal conditions.

REIQ chairman Pamela Bennett said the impact of the floods on the rental market was mainly confined to flood-affected areas.

“With reduced rental accommodation in their immediate area, many tenants and home owners displaced by the floods had to look to other suburbs for accommodation in January and February,” Ms Bennett said.

But REIQ agents in unaffected suburbs reported that this did not result in any significant increase in rental demand in their local areas.

But the outlook in the Brisbane rental market is tempered by the overall slowdown in the housing industry throughout Queensland, particularly the southeast corner.

The biggest shortages of rental housing were in the areas immediately around Brisbane, with significant drops in vacancy rates in the Caboolture and Pine Rivers areas.

Most of the regional cities were steady, but there were substantial drops in vacancy rates in Cairns, Townsville and Rockhampton.

Ms Bennett said the rental market was starting to be affected by the subdued property market with few first-home buyers and investors leading to more demand and less supply in the rental market.

“This also occurred in 2008 when high interest rates deterred buyers, so it is not difficult to ascertain that the current economic conditions and the rapid nature of rate rises last year are having the same effect this year,” she said.

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