Analyst predicts sharp increase in Cairns rents as demand continues to outstrip supply

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A property market analyst is forecasting that the average annual rent for a three-bedroom home in Cairns will increase by between $5,000 and $10,000 in 2022 and he’s blaming government regulations for stifling property investment.

Cairns is among the top locations nationwide set to produce the highest increases in advertised rents this year, according to Propertyology’s Head of Research.

Simon Pressley says asking rental prices for Cairns three-bedders climbed $5,700 in the past five years and it’s likely that hike will be replicated over the next 12 months alone due to a supply shortage.

An annual increase of $5,000 amounts to almost $100 per week.

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“Rental markets are as tight as a mouse in a match box,” Mr Pressley said.

“The pain caused by the dire shortage of rental accommodation extends well beyond the finances and emotions of tenants.

“Australian businesses are collectively breaking new records for job advertisements but attracting someone with relevant skills from out of town is not possible when there’s nowhere for the job-taker to live.”

In Cairns, the rental vacancy rate remains at crisis level, with latest figures showing just 0.8 per cent of the total pool is available.

The average weekly price for a three-bedroom house is $490 – which equates to over $25,000 per year.

Mr Pressley estimates that Australia needs to increase its rental pool by 50,000 properties a year to keep up with demand, but in reality there’s been a decrease of 10,000 homes over the past five years.

He says the issue was already apparent pre-pandemic, caused by government policies and regulations at both state and federal level that have turned off potential landlords.

“If that private investor gets sick of being told what to do, they sell and that property is taken out of the rental market,” he said.

“I don’t have confidence the people in high places have got it yet.

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He cites the tightening of bank lending criteria by the federal financial services watchdog the Australian Prudential Regulation Authority (APRA) and the Queensland Government’s rental reforms that passed Parliament last year as contributing factors to the undersupply.

“Since 2015, those citizens with the capacity to fund more rental supply have been on the receiving end of a Federal Government department enforcing grossly overzealous credit policies along with hitting investors with an interest rate loading,” he said.

“The Federal Government also significantly diluted tax deductions.

“Property managers all over Australia continually say that lots of landlords sold out of the market because they had a gutful of new legislation introduced by state governments, stripping away fundamental controls from asset owners.

“Only a hypocrite would think that restricting an investor’s capacity and confidence will encourage them to participate.

“It’s not rocket science.”

85 per cent of Australia’s rental pool is made up of private ownership, with the rest government-funded social housing.

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