Shock new rental price rises have been forecast for Brisbane – the highest in the country – with more pain ahead for struggling tenants as demand dramatically outstrips future supply.
The CBRE Apartment Rent and Vacancy Outlook, released late Wednesday, examined 53 precincts across Australia’s major capital cities, pinging Brisbane for the fastest levels of rental price growth ahead amid dramatic supply shortfalls. The 2032 Olympic city is expected to be unable to keep with current and future apartment demand.
“There’s no end in sight for rising apartment rents,” CBRE said. “Almost all precincts in Brisbane” are facing the country’s highest rent rises of over 30 per cent, the report said, with the other four areas in the crossfire contained to parts of capital cities – Sydney’s Eastern Suburbs and Parramatta, Melbourne North and Perth City. CBRE Pacific head of research Sameer Chopra said tightening vacancy rates were driving up rents and needed to be around 4 to 5 per cent for markets to be in balance.
Brisbane was expected to see a citywide vacancy rate collapse from 1.1 per cent to 0.8 per cent, with a shortfall of 10,000 new apartments every year exacerbating the situation. Estimates put new apartment supply at 6,500 a year to 2028 in Brisbane, while demand was over two times that at 16,500.
Brisbane has already gone through major rental price rises in the past two years, which forced the State Government to pass laws limiting increases to once a year. The national jump in median rents for two bedroom apartments across the five precincts seeing the biggest jumps was estimated at $120 a week by 2028 or around 26 per cent plus, but Brisbane numbers were expected to surpass that, Mr Chopra said.
He said Greater Brisbane’s current median rent for a two bed unit of $598 a week was forecast to rise to $707 by 2026, and $764 by 2028 – an area stretching from Ipswich to Logan to Moreton Bay.
Inner Brisbane was expected to see higher numbers, he said, going from $630 a week now to $800 a week for a two-bedroom unit by 2028.
Mr Chopra said tenants who could not share costs may be priced out of the inner city, but there would be options across Greater Brisbane with the median in the east at $750 a week in 2028 and $550 in the city’s west out to Ipswich. “This is the price if you want to live in a global city,” Mr Chopra said “At the start of 2013 just four precincts in Australia had an average rent of over $600/week for two-bedroom apartments, being the Sydney and Perth CBDs, Sydney’s Eastern Suburbs and Sydney’s Lower North Shore,” he said. “By June this had grown to 20 precincts and by 2028 we expect 38 precincts – or over 70 per cent of Australia’s two-bedroom apartments – to have a rent exceeding $600/week”. Mr Chopra said despite the large increases, renting was still expected to be more affordable than buying a home across Australia’s major cities by 2028.
“Australia’s monthly apartments rents are currently 30 per cent cheaper than purchasing at current prices across most precincts,” Mr Chopra said. “The reversion of interest rates to say 2 to 2.5 per cent could see this relative rental affordability remain as capital values rise.”
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