Capital city rents may be in the doldrums, but their regional counterparts across the eastern seaboard are going gangbusters.
Almost every regional area in NSW, Victoria and Queensland recorded rental increases in the past year despite their respective capital cities remaining flat.
Affordability, tree-changers and government investment were the main drivers for the uptick in rents in different regional areas, according to Domain’s senior research analyst Dr Nicola Powell.
She said regional towns within commuting distance of Sydney and Melbourne remained popular, such as Wollongong and Geelong, but more far-flung towns were proving attractive too.
“Your Oranges have been on the radar of people leaving Sydney,” Dr Nicola said. “It’s big enough to offer the job opportunities but small enough to provide the lifestyles that families are after.”
But government and private investment in particular towns were also attracting more people to regional areas and putting pressure on rents, said Dr Powell.
The few towns that recorded declines or remained flat were in sync with their respective capital city, said Dr Powell, yet still recorded a strong rental increase over five years.
New South Wales
Byron’s unit rents recorded a whopping 20.9 per cent increase in the past year, reaching a weekly median of $550.
It’s neighbouring region Richmond Valley also recorded a windfall gain of 14.3 per cent for unit rents in the same period, albeit at a lower price of $300.
The principal of LJ Hooker Evans Head Diane O’Farrell said they rarely have enough rental supply to meet demand from a wide range of tenants, including road workers to families relocating for a sea change.
“We’ve only got three rental properties available. We’re always a bit short on properties,” Ms O’Farrell said.
She said the area was attractive because it was landlocked, but that also had its downsides.
“There are quite a few units because we’ve been short on land for years. We’re landlocked, which is appealing to people. We’ll always be a village.”
On the south coast, house rents in the Shoalhaven area rose by 13.3 per cent in the past year, reaching $470.
Houses rents remained flat in Wollongong, year-on-year, but increased 19 per cent to $500 over five years.
Ray White Wollongong property manager Karen Egan said rental demand in the city and northern suburbs was driven by university students and Sydneysiders, respectively.
“All our four or five bedroom houses are turning into share accommodation. It’s cheaper for them to go into share housing than to be accommodated by the uni,” Ms Egan said.
Every region in Victoria recorded a rental increase in the past year with three standing out from the rest.
Unit rents in Mildura and the Wellington area rose 10 per cent reaching a median of $220.
Meanwhile, house rents in Ballarat also increased 10 per cent to $330, leaving the vacancy rate at its lowest since 2002 according to Kate Brennan, a leasing consultant at Ray White Ballarat.
“People are moving from Melbourne and Queensland. We’re really struggling to keep up with the demand with the little supply we have,” Ms Brennan said. “At the moment, I’ve got over 1000 inquiries in a month, and we have anywhere between five and 25 people going through [each property].”
She said while it’s great for landlords, local tenants are struggling to keep up with prices.
“[For] people moving from the city, their rent is cut in half. You can virtually get a house for half the price with a huge backyard,” Ms Brennan said.
Ballarat’s multiple wind farm projects were also blowing workers into town and adding to rental demand, Ms Brennan said.
Dr Powell said investors were also beginning to look at those migration patterns to capitalise on the prospect of capital growth and yield.
“You’ll find the gross yield is much higher in these regional areas … roughly the yield is about 5-6 per cent. There will be a cohort of investors looking for different opportunities in this changed market,” Dr Powell said.
The Sunshine State recorded huge rental increases with some regional areas making up ground after dramatically falling off at the end of the mining boom.
Gladstone unit rents rose by 23.4 per cent in the past year to $197.50 but down 41.9 per cent over five years.
Similarly, Mackay units sit at $270 per week, a 17.4 increase but down 10 per cent over five years.
In the past year, Townsville also recorded a modest rental increase of 6.3 per cent for houses and 7.2 per cent for units.
Business development manager at Harcourts Kingsberry Townsville Scott Walduck said that was mostly due to the recent floods.
“We started increasing rents towards the end of last year, and that hasn’t happened for a long time,” Mr Walduck said.
He said a lot of rentals that were coming up for lease at the end of last year were wiped off the books.
“A lot of properties that were coming up for rent didn’t because if the owners lost their residence, they’d go into it themselves,” he said.
“Landlords moved families and friends in rather than put it on the books with us.”
Mr Walduck said landlords also exploited the shortage of rentals in the aftermath of the floods, demanding double the property’s appraisal amount.
“We went from having 96 properties before the floods to 19 properties, and people thought they could do that,” Mr Walduck said.
He believed rental supply would slowly trickle back onto the market in the next six to 12 months.
This article was first published in www.domain.com.au. Here is the link to the original article.