Demand for apartments in Brisbane is still strong but falling – most likely as a reflection of the reduced number of units coming on to the market.
Hipsters drove over a billion dollars’ worth of unit sales in inner Brisbane last year, latest data shows, but it was a sharp drop on the previous year’s record results.
The latest Place Advisory Inner Brisbane apartment report, set for release Monday, found gross sales of new units declined to $1.304 billion as the market continued to soften.
It was a 59 per cent fall from 2015’s record sales of approximately $3.194 billion.
Place Advisory head Lachlan Walker saw a clear slowdown in the number of units that developers were putting to market, with 2980 apartments released over 2016 in 25 new projects, down by a third over 2015’s figure and almost half the number released during 2014’s peak.
In the light of oversupply, there was a 14% drop in building approvals in 2016.
Depending on which interpretation one chooses, the 3.6-3.7% vacancy rate in inner-city Brisbane is either a cause for concern or about right for the market. The vacancy rate in Greater Brisbane sits at 3% and has done for the past five quarters.
Not surprisingly, the apartments spending the shortest time on the market and selling for the highest prices, are those in the best locations with plenty of local amenities and public transport.
Apartment prices might drop but house prices appear to be holding stay in Brisbane. Nevertheless, according to Dr Andrew Wilson, chief economist for Domain, Brisbane is likely to outperform other capital cities this year.
The median house price for Brisbane was $532,050 at the end of November this year. This is expected to grow to $553,332 in the next 12 months. In contrast, the median unit price is currently $367,720 and is expected to shrink to $353,011 in the next 12 months. (Source: http://www.yourmortgage.com.au/article/mixed-forecast-for-brisbane-property-market-in-2017-228694.aspx).
Brisbane’s office market is still slow, but the pundits are expecting to see a fall in vacancy rates in the city with an improvement to the state’s economy. CBRE Associate Research Director Felice Spark is expecting a gradual recovery.
According to the Property Council of Australia’s latest Office Market Report, vacancy rates dropped in the CBD from 16.9% to 15.3% in the last half of 2016.