Brisbane faced with prospect of apartment oversupply as new units flood market

Brisbane’s apartment market will see a flood of newly built units over the next 12 months, putting pressure on the city’s apartment vendors and confirming the Reserve Bank’s fears.

Unit supply in greater Brisbane is scheduled to grow by 20 per cent over the next two years, with 39,420 apartments and townhouses hitting the market, according to property analytics firm CoreLogic.

Of this, there will be 15,650 additions over the next 12 months.

Valuation firm Herron Todd White’s senior executive Gavin Hulcombe said that in some extreme cases there were resales up to 30 per cent less than the off-the-plan price. 

“What we are seeing is some of the secondary, lesser designed, lesser built apartments are not seeing price growth,” he was cited as saying by The Australian.

Forecaster BIS Oxford Economics has already tipped price falls for units of 7 per cent between now and 2020 — 14 per cent in real terms. 

Latest figures from the Real Estate Institute of Queensland show an overall decline of of 2.3 per cent in the average price of apartments in the June quarter.

However, Urbis recently tipped that the Brisbane apartment market has been self-correcting and unlikely to suffer any great supply-demand imbalance. 

Fly-in, fly-out worker Rebecca Tavo, 34, has just listed her one-bedroom, one-bathroom, one-car unit in inner-city Teneriffe for sale on Gumtree, with hopes of a $450,000 sale. After owning the apartment for about eight years, the mine worker and sportswoman expects to get her money back and return to Western ­Australia.

“I don’t have any qualms I will sell it, it will just be at what price,” she said. 

To woo buyers, developers are offering discounts, rental guarantees and furniture packages.

There is a backlog of more than 2,200 units — about two years of supply — still awaiting to be sold in some projects.

Marketers for The Marc Apartments in inner-city Kangaroo Point are knocking $5,000 off the price as well as offering $15,000 furniture packages, free blinds and a one-year rental guarantee on two-bedroom units for buyers who sign up before September end.

PPB Advisory head of real ­estate Garry McLean said this quarter would give a better idea about where the market was headed.

“We are hearing mostly positive stories,” he said. “Most of the settlements that have occurred have gone reasonable well, though it is certainly slower in the tail end.”

He said the “massive surge” in supply followed a long period post-GFC when little was built.

“I would expect there to be some price reduction but, again, we are seeing the rental market holding well and we’re not seeing significant unoccupied apartments coming through,” he said.