Rental vacancies on the Gold Coast are low, and along with short-term holiday leasing, the rental housing market is only increasing in competitiveness. From median house rental prices to projected yield and rental availability, the current rental shortage on the Gold Coast will have a notable impact. Supply has been short as the population in this area has grown during the past two years, with more and more people choosing to move away from the larger cities. Let's take a look at the rental shortage on the Gold Coast and how it is impacting the rental space in the area.
There is no doubt that the demand for housing on the Gold Coast has increased over the past few years. Throughout 2021 and into 2022, the rental need has been on the rise as more people are beginning to migrate to Queensland. Rental Properties have become even more in demand as families begin to move away from Sydney.
These population increases naturally bring rental shortages, especially when combined with low interest rates. While developers are working to match the new growth in demand, the current rental market is struggling to keep up with the need.
All these factors combine to further exacerbate the rental shortage on the Gold Coast. In April 2021, the Real Estate Institute of Queensland reported that "extremely low vacancy rates endure across 80% of Queensland." They documented that the suburban rental vacancy rate is low across many cities, including Brisbane.
According to the Australian Financial Review, vacancy rates under 1% were noted across 70.2% of Queensland's rental markets. It was pushed to its limit as the migration to the Gold Coast, which was originally spurred by the pandemic, continues to grow. Because of the limited availability, landlords and property investors are able to take control of the market and take advantage of the situation they find themselves in.
Now that we know for sure that there is a rental shortage on the Gold Coast, what will the short-term and long-term impacts be? How will the situation influence both renters and landlords? Let's take a look at the rental shortage consequences.
As you may learn in an entry-level economics class, high demand paired with low supply usually results in high prices. This is the case when it comes to the rental market on the Gold Coast. At the end of 2021, rental costs rose by 20.2%, according to SQM Research. The rate was even higher for house rentals, which jumped 27%. Those who live in a high-rise found the rent to increase by 17%.
The rental price increases are directly related to the market shortages, with rent and property prices rising in some areas higher than ever, according to SQM Research managing director Louis Christopher.
On the Gold Coast, rents in the following areas saw record increases:
Landlords in the area have capitalised on the value of existing rental spaces, resulting in investors seeing a growth in their portfolios. The Financial Review reported that one Gold Coast rental property investor who added a unit to his portfolio before the pandemic has seen the value double, as well as an increase in rent by 30%.
Even as rent prices increase, the demand for rental units and houses is still growing. For example, a long-term rental on the Gold Coast that cost $4000 a week was only on the market for less than 24 hours, as reported by realestate.com. This is an extreme example, but even average rentals do not last long on the market despite their relatively high price.
As an investor, you may be interested in securing some property on the Gold Coast for rental purposes. But is now a good time? Of course, it is up to your own discretion based on your personal circumstances and situation, but there are some generalised statements that can lead you to make the choice.
For example, you could take advantage of the Autumn Selection provided by Ray Wight Surfers Paradise. The Autumn Selection is the next ideal opportunity to capitalise on this current market. Because our database is the most powerful on the Gold Coast, Ray White Surfers Paradise is the perfect partner. The rental market is competitive, and interstate buying has added to the strength of the Gold Coast rental properties.
As our Chief Executive Officer Andrew Bell puts it, "It was a great honour to elevate the Gold Coast property market to unprecedented levels, and it was a great honour to represent our sellers and to achieve the incredible results that they are enjoying."
The future is bright when it comes to investing in Gold Coast rental properties. While the rental shortage is projected to continue throughout this year, there is still room for growth. The supply might take up to five years to catch up to the demand that has been skyrocketing. Banks are keeping a close eye on the loans they give out to developers, so building and developing will not be happening fast enough to make up for the lack of supply.