Why is renting in Brisbane so expensive?

Rental prices in Brisbane have exceeded Melbourne
According to Domain’s June 2023 report, Brisbane’s rental prices have actually surpassed Melbourne.
The average rent for a house in Brisbane is sitting at $580 a week (an annual increase of +11.5%) while in Melbourne it’s currently $520 a week (with an annual change of +13.0%).

But the growth isn’t just with houses, units have increased too. For a unit in Brisbane on average, you can expect around $530 a week (an annual increase of +17.8%) while a median unit in Melbourne is $500 a week, (an annual increase of +22.0%).

While this is just a snapshot of the rental market, it also doesn’t consider applicants who are willing to pay more just to secure their rental property or those looking to pay a few weeks’ rent in advance to entice landlords.

Why is Brisbane becoming so expensive?
There are a few reasons for skyrocketing rentals. Landlords have increased rents as a result of the Reserve Bank’s interest rate hikes with higher loan repayments being passed these onto renters. But it’s also partly due to housing supply, where there’s simply a higher demand of houses than there is supply in Brisbane. Rental vacancies in Brisbane in May 2023 were 0.8%, which the Real Estate Institute of Queensland (REIQ) deems a “tight” rental market, (anything from 2.6 – 3.5% is in the ideal to healthy rental market). So, with less rentals around, tenants are simply having to fork out more each week to keep up.

Population growth is also affecting supply and Queensland’s population is increasing rapidly. With COVID lockdowns and remote working, some of our fellow capital city dwellers moved to the Sunshine State, while general population increases (like birth and death rates) and immigration have also lifted the Queensland population. This boost in numbers isn’t likely to settle anytime soon. In fact, the Queensland Government expects the state’s population to grow from the current 5.4 million to between 6.4 and 8.27 million by 2046.

A white and pink Queenslander on a hill in a Brisbane suburban street, with a city skyline in the background.

What about buying?

Comparatively, buying a home isn’t that much more expensive than renting, but more importantly, you’ll be paying off your own home rather than someone else’s.

In Alderley, a one-bedroom, one bathroom and one car space property will set you back around $500 a week to rent, while at Brickworks Park, owning a home can be as little as $617 a week based on a $454,000 apartment. Buying the property will only cost $117 more a week than renting, or $34 a week more, if you deduct the amount paid off your home loan over that week.*

But won’t interest rates come down in future?
While interest rates are set to remain steady for now, there’s no denying that interest rates have risen over the past 12 months. Alongside these rate hikes, landlords have increased their rents to cover their loan repayments. However, if interest rates dropped overnight, there would still be a housing shortage. So, when rates stabilise or even reduce, rents are likely to remain high and could even continue to rise due to the supply versus demand issue we’re experiencing in Brisbane.

A render of a modern apartment balcony at Brickworks Park

What can I do?
We get it, buying a home for the first time can be daunting, but there’s plenty of support available. In our five tips for first home buyers article, we’ve outlined a few tips and tricks to help make sense of it all, including what the current state and federal government initiatives are to help first home buyers get ahead of the game and build their property portfolio.

At Brickworks Park, you can also lock in your apartment or townhouse with your deposit now and continue to save prior to construction completion, so you can finally have a place of your own.

With rising rents, it makes sense to consider buying a home and with our helpful team including financial experts willing to help you out, it’s worth reaching out and exploring your buying options.

To find out how you could call Brickworks Park home, call the friendly team at Position Property on 1800 861 868 or make an enquiry here.

*This example is based on a $550 week loan 6.04%PA var interest, 80% LVR, 30-year loan term. This weekly buying sum also includes a $112 weekly projected amount for body corporate, council rates and Urban Utilities.

The information in this article is general in nature and does not constitute as professional advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information in this article relates to your unique circumstances.

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