Record levels of new apartment completions in inner-Brisbane’s apartment market has seen it tipped into oversupply, with 52 projects abandoned or deferred over the 2017-18 period.
A new report from economic forecaster BIS Oxford Economics shows 8300 apartments will be completed in 2017-18, up from the 5,700 apartments that came on line last year. Another 5000 apartments are in the pipeline for 2019.
Due to these numbers, vacancy rates in the inner-Brisbane market have increased, sitting at four per cent in the December quarter for 2017.
The flow on effects of the large-scale development and high-rise projects flooding the market have ensured downwards pressure on rents and prices for Brisbane residents.
Brisbane’s record levels of apartment completions, buoyed by an investor-heavy market, has been well publicised, and BIS has signalled that the inner Brisbane apartment market may level out. Building approvals data released this week revealed that apartment approvals fell 15 per cent over February.
Brisbane’s CBD and Spring Hill area, West End, Toowong, Woolloongabba, Hamilton and Brisbane’s inner east and north are the key areas with high saturation of large scale and high rise projects.
Suburbs West End, CBD and the inner north have the highest number of apartments yet to come to market, followed by Toowong and Woolloongabba.
The inner Brisbane market has experienced moderate growth since 2013 which BIS attributes to attractive yields, low or volatile returns for other investment options and low interest rates.
Falling rents and price growth coupled with restrictions on interest-only loans and a stamp duty surcharge for overseas investors has also diminished investor demand. BIS expects to see fewer projects able to achieve the pre-sales requirements for projects to begin.
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The outlook for property nationwide will be modest at best this year, according to a recent report released by ANZ economists. National housing prices have fallen for the past six months, and house prices were just 0.8 per cent higher than at the same time the previous year.
Those numbers are compared to a 10 per cent year-on-year price growth 12-months earlier.
Although outright falls are unlikely, ongoing price growth will be sluggish as conditions for the housing market for the remainder of the year remain uncertain.
Recently released 2016 Census data shows private rental apartments accounted for 56 per cent of the total apartment stock in the inner Brisbane apartment market area – contrasted with a 33 per cent share in the greater Brisbane region.
Unoccupied dwellings accounted for 17 per cent of total apartment stock in the inner Brisbane area, compared to eight per cent across greater Brisbane. The increased number of properties not entering the private rental market reflects the increasing number of overseas demand.