By Matt Gross, The National Property Research Co.
The Brisbane apartment market has been in the press significantly over the past twelve months, mostly for unflattering commentary. There has been no scarcity of cranes on the skyline and even blind Freddy could see that Brisbane was in the midst of a construction boom the likes that had never been seen before.
The 2016 Census showed very clearly where the greatest supply had occurred from 2011 to 2016. Much of this took place in some of Brisbane’s most loved and affluent suburbs. So what did the top 10 movers and shakers look like?Hamilton has grown in volume around its proximity to the City and being a riverfront suburb, its appeal is broad. Combined with improving infrastructure that was initially stimulated by the cruise ship terminal, the Council is now spending millions to upgrade Kingsford Smith Drive to make it a cycle and pedestrian friendly destination. In addition to this, Economic Development Queensland has earmarked the vacant port side area to potentially be the equivalent of Southbank, albeit for the northern suburbs.
Bowen Hills was largely driven by a change in legislation and urban renewal. A significant part of this region was influenced by one of the most expansive investment fueled markets that Brisbane has experienced in the past three decades. An area that was recognised for its industrial nature has faced rapid urbanisation making good use of its proximity to the CBD.
South Brisbane rounds out the top 3 inner city suburbs supported by some of Brisbane’s most loved parklands and family entertainment precincts. The growth in South Brisbane is a “no brainer” that will continue well into future census results.
With Southbank, creating some of the newest café and restaurant precincts plus the future addition of the cross river rail and Queens Wharf casino adjacent, it is difficult to foresee South Brisbane struggling anytime soon. Education also remains a principle driver of this location with Brisbane State High, St Laurence College, Somerville House, Universities and Tafes all being highly prominent.
Chermside’s apartment supply remains somewhat concerning given the high rate of supply into the investment community with the major anchor or attractant being the Westfield Shopping Centre. Having stated that, there has been considerable growth in the professional services area creating a satellite employment centre.
Despite this, the level of apartment development is proportionately quite eye catching when contrast with the local housing market.
However it should be remembered that the Census is but a snapshot in time. There is an expectation that these numbers are already outdated given the supply that has been added through the latter half of 2016 and also in 2017. Combined with this will be those projects that will settle later this year and 2018 which should account for the bulk of the projects.
Some will dribble into 2019 however with APRA’s constraints, the highrise construction boom will well and truly have peaked in the following 18 months.
As National Property Research noted at the start of the apartment boom, the greatest risk was in the middle ring apartment market. The result being a vacuum being created in the inner city and near city suburbs where rents would be highly competitive in modern buildings with new facilities.
Certainly this appears to be the case both in terms of the competitive nature with some projects offering up to as much as six weeks rent free, a $300 voucher plus a gym membership, iPads, free wifi, make an offer, etc. This is very difficult for those middle and outer ring suburbs to compete with on such a scale. As a result, the new buildings are letting up quite well, albeit with many at significant rental discounts. The tenant has all the power in this market.
Suburbs that are likely to climb up the rankings are, in no particular order, West End, Newstead, and Chermside, with Woolloongabba which currently sits in position 14, a real chance of creeping into the top 10.