The Gladstone rental market has stolen the spotlight in the REIQ Vacancy Rate Report for the March quarter, with its long-awaited move into the healthy range, tightening from 4.2 per cent to 3.1 per cent, for the first time since December 2012.
This market has been gradually improving since it peaked at 11.3 per cent vacancies in March 2016. The inexorable downward trend has consistently suggested an improving market with rental supply and demand trends now the closest to intersecting in almost seven years.
With this continually improving rental market, it is unusual that the sales market has continued to fall, with the median sale price falling 3.6 per cent in the year to December 2018, to $270,000 and 37.2 per cent below the level of five years ago. We will watch and wait to see how this market develops.
Our hope is that the sales market takes its lead from the rental market and shows signs of improvement.
We are concerned that the rental market will take a hit following the federal election, with negative gearing reforms likely to drive up rental prices, according to independent economic modelling from research analysts SQM.
They forecast a few different scenarios, but if Labor’s proposed changes remain as announced, rents could potentially rise by about 22 per cent. Removing negative gearing benefits for established houses would likely reduce the number of investors in the market, and those who do buy an investment property will have to positively gear their property and will raise rents to do that.
It’s a concerning problem for markets that are as fragile as the Gladstone rental market.
On the up side, the State Government is currently focusing jobs initiatives in this region and there are some exciting projects on the horizon, such as the stated goal to make Gladstone the renewal energy hub of Australia. The plan is to develop an expert market for hydrogen created by solar farms. This will work well for markets such as Japan, which have declared a desire to be a 100 per cent hydrogen powered country in coming decades.
One thing is certain, there are plenty of reasons to be optimistic about the Gladstone housing market at the moment!