Rental Market Update in the COVID Boom!
by Leigh Martinuzzi
Rental vacancy rates across the nation haven’t looked this good for a long time. On the Sunshine Coast, the vacancy rates currently sit at 0.5% which is the lowest on record since 2005. Nationally the vacancy rates dopped a further 0.1% this month, down to 1.7%. This is an approximate total of 62,000 properties around Australia available for rent. The vacancy rates for many regional areas, like the Sunshine Coast, are sitting below 1%.
What does this mean for rental prices? Well, as it is happening with property sales, as demand escalates and supply reduces, prices rise and this is exactly what is happening in the rental space. The question that is commonly being raised is, “is it cheaper to buy a house than to rent?”
Is it cheaper to buy than to rent?
Nationally the median rental price being asked is $575 per week. In the rental market, prices in the past 12 months have risen significantly in both the housing and unit sectors, up 15.1% and 6.6% respectively. Regional markets are reporting more substantial gains than that of the capital cities as property supply struggles to keep up.
Locally, on the Sunshine Coast, for a 4-bedroom home, the median asking rental fee is $630 per week up from the previous 12-month average of $530. For a 3-bedroom unit or townhouse, you’re looking at asking prices of around $520 per week, up from $435 just 12 months ago. The question remains, is it indeed more affordable to buy than rent? Well, that depends on where you live.
Recent sales stats on the Sunshine Coast now suggest that the median price to purchase here is $770,000, which 12 months prior was recorded at $645,000. That is a 19.4% increase, well above the national average that sits currently around 14%. The new median rental prices on the Sunshine Coast is up approximately 18% over the last 12 months, now at $550 per week.
Now, based on a 3-year fixed loan at 2.19%, assuming a 20% deposit is paid, for the median house price of $770,000 on the Sunshine Coast, mortgage loan repayments would be $540 per week. Of course, there are other costs beyond the weekly rental fee however, I am not sure it would gap the difference between $540 a week in mortgage repayments compared to $630 per week in rental fees.
Recent figures provided by CoreLogic highlight that nationally there are 36.3% of properties are cheaper to buy than rent. This is skewed by the capital cities in which 73.8% of properties are cheaper to rent than to buy. Whereas in regional areas it is a different story, with the combined regional areas reporting that 60.1% of all properties are cheaper to buy than rent and in regional Queensland including the Sunshine Coast that figure sits at 73.1%. In summary, here on the Sunny Coast generally across the board, you can expect it to be cheaper to buy than to rent.
