06 Dec 2021

Brisbane Rental Market: The Year in Review

It’s been a landmark year for the Brisbane rental market.

An influx of new residents from the southern states and a booming sales market both had a big impact on the rental market in 2021.

Let’s take a look at this year’s Brisbane rental market trends and where the experts think the market will take us in 2022.

Low vacancy rates

As one of Australia’s COVID-zero capital cities, Brisbane has experienced a tight rental market since the pandemic hit.

The latest figures from the ABS show that in the December 2020 and March 2021 quarters, Brisbane experienced the greatest net migration of all the capitals, with residents of the southern states moving here in search of sunshine and a lockdown-free life. This was one of the factors putting pressure on vacancy rates.

Brisbane’s vacancy rates have plunged this year, from 1.7% in January to a low of 1.3% across May, June, July and August. By October, rates had risen slightly to 1.4%, according to SQM Research. Typically, a vacancy rate of around 3% is considered a sign of a balanced rental market.

Low rental stock levels

Another factor contributing to this year’s low vacancy rates was the low volume of rental listings. The number of properties available to rent in Brisbane this year was at its lowest level in around nine years, according to data from SQM Research. Weekly rental listings hit a low of 6,540 in May, the lowest level seen in Brisbane since 2012.

The situation did ease slightly as the year went on, with the Financial Review reporting a 13% increase in inner-city apartments from the June to the September quarter. Domain also reported investors returning to the market in this quarter, generating an increase in rental stock and a lift in rental listings from their mid-year lows.

Record-high rents

Fuelled by low vacancy rates, a shortage of rental properties and rising house prices, rents in Brisbane hit record highs in 2021.

The September quarter was the fifth consecutive quarter in which house rents rose, making it the longest period of rising house rents in 14 years, according to Domain. As demand for affordable housing close to the city centre increased, the September quarter saw rents for units rise faster than for houses for the first time this year.

Despite all regions across Greater Brisbane being at record high house and unit rents, our city remains the third most affordable Australian capital for median house rents and the fourth for units. Domain is also reporting that the pace of growth seems to have peaked, and a more measured rate of growth is expected moving forward.

Mixed results for yields

With Brisbane now, one of the fastest-growing property sales markets in Australia, results for rental yields this year have been mixed.

Brisbane house values are now at a cyclical high, according to CoreLogic, and thanks to these skyrocketing prices, house yields are down year on year. The median house yield was 4.41% in the September quarter, according to Domain, 4.2% lower than in September 2020. The flipside, of course, is healthy compound growth rates and increased capital gains.

Yields on units, meanwhile, have risen by 1.5% over the same period to reach 5.22% in the September quarter.

Looking ahead to 2022 and beyond

Experts are predicting ongoing tight rental market conditions in Brisbane in the coming year. As domestic and international borders open, the influx of new residents from other Australian states and overseas is expected to put further pressure on our rental market.

The rental squeeze is predicted to be felt nationwide, but Brisbane is likely to be the hardest hit due to insufficient new supply of rental stock and its popularity as an internal migration destination. As a result, the Financial Review is predicting a rent increase in excess of 5% over the next five years.

Looking for more information or advice about the Brisbane rental market? Contact our specialist Brisbane property management team today.

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