Here’s my take on what’s going on with the Brisbane apartment market. Here I am talking about the City of Brisbane (LGA) which extends in a 20km radius from the Brisbane GPO.
1. About 1,184,000 people live in Brisbane. This area is expected to grow by some 16,000 new residents per annum.
2. There is a need to build 6,500 new dwellings each year to adequately house this population growth. Our Housing Preference Model suggests that about half of this demand will be for apartments.
3. Our work suggests that the local apartment market is currently oversupplied by 15%, when it comes to new supply.
4. In contrast, the Brisbane townhouse and detached housing markets have limited new supply. More new infill townhouse and freehold housing development is needed.
5. As a result apartment prices are falling. So too are both off-plan and resale sale volumes. The apartment rental market is also oversupplied, with an available rental rate over 6% for inner Brisbane. Weekly rents are now falling.
6. The Brisbane apartment market is in a downturn.
7. In contrast the Brisbane detached housing market is in an upswing. Sales volumes, prices and in some instances, weekly rents are rising. The local townhouse market is also improving too but at a slower rate.
8. However, looking forward new supply lines for apartments are starting to dry up.
9. Yet it will take some time to absorb the excess stock and I anticipate that the recent and committed new apartment oversupply will take about three or four years to absorb.
10. The Brisbane apartment market is likely to enter stagnation in 2018 and will most likely rest there for several years, whilst the detached housing/townhouse markets, during calendar 2018, are likely to remain in an upswing, albeit mild ones.
For mine, Brisbane needs to create a lot more new full-time, and higher paying, jobs before the city enjoys a strong property recovery.
Also the current apartment overhang needs to be absorbed.
Again, like last week, Ceteris paribus and Caveat emptor apply.
Until next time,
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