Calls to release short-term and holiday rentals to curb growing rental crisis

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on March 07, 2022 Fact Checked
Calls to release short-term and holiday rentals to curb growing rental crisis

Renters are faced with the tighest market on record, with Queensland's real estate institute calling for the release of investment properties.

The Real Estate Institute of Queensland (REIQ) and Q Shelter have launched an appeal to Queensland property owners to release investment properties onto the long term rental market as vacancy rates plummet and homelessness soars. 

Domain's Rental Vacancy Report for February noted Brisbane's vacancy rates fell to 0.8%, with the aftermath of floods across the city set to tighten the screws further

REIQ CEO Antonia Mercorella said the Queensland rental market was already at historically low vacancy rates leading up to the recent flood crisis.

Ms Mercorella notes there are approximately 200,000 properties currently in Queensland that are either vacant or used for short-term and holiday letting purposes.

"As we have seen, the catastrophic floods have resulted in thousands of rental and owner-occupied properties impacted by the floods, further reducing rental stock," she said.

"At the same time, displaced tenants and owner-occupiers are now hitting the market desperate for alternative accommodation, adding to the already unprecedented demand for long term rental accommodation.

"It is difficult to see any way that this wave of demand can be met without the support of property owners moving their properties to the long term rental market."

Executive Director of Q Shelter Fiona Caniglia said the number of people in Queensland facing homelessness will grow significantly unless more properties coming onto the long term rental market.

"The impacts of the pandemic proved that home is everything to our health and safety," Ms Caniglia said.

"The longer people live with the anxiety of not knowing where home will be, the greater the impact on our society."

Tight rental market also a national issue

Australia's rental vacancy rate reached 1.1% in February with Domain's Rental Vacancy Report highlighting the figure is the lowest since Domain began reporting in 2017. 

Across the property industry, sentiment remains that current tightening conditions of the rental market continue to swing in favour of landlords, further supporting potential rental price increases.

Managing Director of SQM Research Louis Christopher said due to the very low vacancy rates and the trend of the vacancy rates, rents across Australia are expected to continue rising.

"We could see rents in some areas a rise between $3000-6000 per annum – which would be no small thing at all," Mr Christopher said.

"It is not normal, and it is not healthy for six of our eight capital cities to have vacancy rates below 1% - this indicates that Australia's seeing a crisis for rental properties."

Head of Research and Founder of InvestorKit Arjun Paliwal said this could be exacerbated by international borders opening.

"It’s going to be harder for people to find properties and also going to mean people are going to likely stretch themselves a bit more," Mr Paliwal said.

"It's going to get worse before it gets better."

Recently, ME Bank's Household Financial Comfort report found 67% of renters reported rental payment stress, as they paid more than 30% of their household disposable income to cover rental payments.

Rental and housing affordability outstripping wages

CoreLogic's Home Loan Value Index for March revealed housing affordability continues to be eroded by the high rate of growth in dwelling values alongside low income growth.

The report details between March 2020 and December 2021 wages increased 3.3% compared to the 22.6% lift in housing values.

SQM Research also revealed in February combined capital city asking rents rose by 5.2% over the past 90 days and are up by 7.5% for the past 12 months to stand at $505 a week.

This represents the highest quarterly increase in rents of any period over the past five years.

"All this represents an acute shortage of rental properties, and the shortage has already been translating into large surges in weekly rents across the country," Mr Christopher said.

"It is now very likely market rents will rise by over 10% this year, yet it could actually be much more than this as we are recording a rise in capital city combined rents of 5.2% just in the last 90 days [to 15 February].  "As such there are major ramifications for core and headline inflation."


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Variable
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Image by Karolina Grabowska via Pexels

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Jacob Cocciolone joined the Savings team in 2021 as a Finance Journalist. Driven by a passion for keeping Australians up to date with the latest financial news and trends, his areas of interest include financial technology, investing, property and motoring.

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