Buyers become savvy as Brisbane apartment developers press pause button

Buyers become savvy as Brisbane apartment developers press pause button
Buyers become savvy as Brisbane apartment developers press pause button

Brisbane’s new apartment market continues to self-regulate with both demand and supply dropping away in the June quarter, according to new research released today by property consultants, Urbis.

The latest Urbis Brisbane Apartment Essentials found, on the back of Brisbane’s first apartment boom, developers had hit the pause button on some developments slowing the supply of new apartments to the market.

The report also recorded 810 new apartment sales in the June quarter - the third consecutive quarter of decline and the lowest volume since early 2014.

Urbis Associate Director Paul Riga said the decline in the total sales was expected but the launch of fewer projects had resulted in a market where supply and demand were still within reach of each other.

“We are seeing the market continue to self-regulate, returning to a more sustainable level of activity and giving the market time to absorb the current stock available,” Mr Riga said.

“Essentially the sales are still there but they are much harder to achieve for developers.”

The report advised the contraction in the market was felt right across the Inner Brisbane precinct

It forecast sales volumes around the 800 mark were likely in the next two to three quarters.

“Many of the monitored projects have moved into the construction phase, winding down the level of sales and marketing,” he said.

“In addition, we now have a savvier, more discerning level of investor operating in the market”.

Some 25 new projects are expected to launch between July and December 2016, bringing a potential 2,850 new apartments to the market.

“This is around half the level of supply brought to market at the same time last year,” he said.

The Brisbane Apartment Essentials report also found sales prices had also been steadily decreasing since the end of last year – particularly with two-bedroom product.

“The decline in the median sales price has been largely driven by product availability, with a larger proportion of transactions occurring in more affordable Inner Brisbane precincts,” he said.

Mr Riga said there had been an increase in the proportion of sales in Brisbane’s inner-city for one-bedroom apartments with one-carpark, making up 34 percent of total sales.

However he said the staple configuration remained the two-bedroom, two-bathroom apartment, which represented 50 percent of total sales.

Data from the report showed 162 projects were selling off the plan, with approximately 70 percent of these currently under construction or completed.

“We are now moving firmly into the delivery phase of Inner Brisbane’s first major apartment boom, so the focus is increasingly turning towards the rental potential of these apartments,” Mr Riga said.

“It will be a competitive market and we are progressively going to see a ‘flight to quality’ – with tenants looking for projects that offer value, connectivity, lifestyle amenity and a point of difference.”

The Brisbane Apartment Essentials Report found:

 810 sales were recorded in the June quarter - the lowest volume since early 2014.

 The weighted average sales price for the June quarter was $578,580. This was a decrease of $17,084 since the March quarter. The weighted average sales price has been steadily decreasing since the December 2015 quarter.

 Higher proportion of two-bedroom apartments selling at a lower price point and higher levels of one-bedroom stock selling.

 One-bedroom, one-car product made up 34 percent of sales compared to 27 percent in March 2016 quarter.

 Reduced apartment launches (and subsequent sales) in the quarter.

 There were 32 percent fewer apartments launched to the market compared to the previous quarter.

 Low and mid-rise projects registered 45 percent of total sales in the June 2016 quarter, compared to only 17 percent of sales in the March quarter 2016.

Brisbane Apartment Market

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