Brisbane unit market at four o'clock, with prices still falling: Experts

The Brisbane unit market fared worse than the house market in the last six months of 2011 and, like Melbourne, faces an oversupply of this type of property.

Real Estate Institute of Queensland figures for the December quarter 2011 show that rental vacancies in inner Brisbane – where most of the stock is apartments – increased from 1.4% in the September 2011 quarter to 1.9% in the December 2011 quarter while the overall city vacancy rate remained unchanged at 2.3%

In addition, valuation firm LandMark White is warning that a combination of too many projects and historically low demand could result in an oversupply of new apartments in inner-city Brisbane suburbs like Fortitude Valley and Bowen Hills.

The firm’s property valuers believe affordable “entry-level” apartments within five kilometres of the CBD will continue to appreciate in value but expect values in prestige units in new complexes to continue to fall.

“We have seen demand for prestige units decline again, with extended marketing periods or heavy price reductions,” says WBP.

On the other hand, “entry-level units are being purchased by single professionals who require affordable housing and access to the Brisbane CBD. We have recently seen volumes of sub-$400,000 unit sales increase.”

Michael Yardney is very bearish about Brisbane units, placing the market in the relatively early stages of a property downturn at three o’clock.

“There are a large number of off-the-plan apartments available in the Brisbane CBD and surrounding suburbs. Many of these remain unsold, and this oversupply of properties will put downward pressure on prices and rentals,” he says.

“Many of the apartments that have been sold off the plan are coming on stream in the next few years and have been purchased by investors.

“Some will have difficulty getting finance and settling their purchase. Others will be disappointed to see the end value of their properties is less than their purchase price,” Yardney says.

“There will be an oversupply of inner-CBD and near-CBD apartments in Brisbane for a few years, causing prices to fall slightly.”

Population: 2 million 

Median unit price: $355,000 

Unit price growth in February 2012: 0.3% 

Annual unit price growth to December 2011: -6.5% 

Annual unit price growth to July 2011: -4.3% 

Rental yield: 5.2%

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Property Observer also tracks Brisbane houses on the property clock.