A high concentration of inner-city apartments has caused a chain reaction in the Brisbane rental market, leading to rental yields for detached houses falling more than seven per cent in the past year.
Stagnant rents and vacancy rates for the Greater Brisbane region hide a more serious problem investors are now making less returns because of a slow uptake in apartment supply and a correction to the market could be more than a year away.
"There's no doubt with the increased supply we're seeing downward pressure on rents," Domain Group's chief economist Dr Andrew Wilson said.
Commenting on the latest Domain State of the Market Report, buyer's agent and property pundit Pete Wargent said the blame did not fall solely on the private or public sectors."It was a confluence of factors; the city plan allowed a lot of new apartments to be built and for a certain amount of time the city council was happier to approve borderline cases but I know now it's harder for them to get approved," Mr Wargent said.
"The other thing was Chinese buyers, which was a trend that came out of nowhere. I think developers became more confident they could sell apartments to anyone."
Construction mainly focused on Brisbane's centre and that was now the area with highest vacancy rates, PRD Nationwide's Dr Diaswati Mardiasmo said."The vacancy rate for the postcode 4006 is about 5.2 per cent," she said. "Put it this way, I live in Acacia Ridge, which is 4110 and the rate there is 2.9 per cent.
"There might be lower vacancy rates in your suburb but [Greater Brisbane's rate] stayed stagnant because it's levelled out."
Rents themselves had fallen too; $400 for houses and $370 for units, flat year-on-year for houses but down 1.3 per cent for units.
Haesley Cush, of Living Here and Ray White, said competition between landlords to set out flashy and new apartments from each other drove down prices of the new builds.
"If you release 200 units at the same time with very little difference between them, the first one that's going to rent will be the cheapest one."
Mr Wargent said he was surprised by the lengths property managers and landlords would go to secure a lease.
Incentives offered do distort the statistical data as the "face" rent appears unchanged and does not reflect the 'discount incentive' received by tenant, eg 4 weeks rent free on a 12 month tenancy agreement equates to 7.7% rent discount.
