City Beat June 2023: Brisbane's tight supply drives off the plan apartment sales
The Brisbane property market continues to rebound from its double-digit losses across 2022 and early 2023.
Only the Queensland capital and Perth recorded dwelling value gains of over one per cent (1.4 per cent) across May, according to the latest Home Value Index by property data analytics firm CoreLogic. Brisbane values are now -9.4 per cent below their June 2022 peak.
House values in Brisbane rose by 1.5 per cent to be -9.3 per cent down over the last 12 months.
Units, which incorporates both apartments and townhouses, have faired better during the property market downturn. Their 1.1 per cent value jump in May means they are now 1.4 per cent up over the last 12 months and two per cent since the start of 2023.
The median unit value in Brisbane is now $504,000.
What's happening in the Brisbane off the plan apartment market?
There's still a significant undersupply of quality stock across Brisbane. With few new projects launching, sales successes are being achieved across the small selection of apartments on offer.
In their first foray into the Brisbane market, diversified national developer Goldfields has just announced it's already sold half of the apartments in 33 Manning, their Rothelowman-designed tower in Milton.
33 Manning Street, Milton
They've transacted over $14 million worth of sales in the last 10 days alone.
Goldfields CEO Lachlan Thompson says that while demand has been robust from the outset, they've noticed increased buyer sentiment in the past month, with people becoming more confident in making a decision to purchase.
"Buyers obviously need confidence in the developer; however they’re becoming increasingly informed about the instability in the construction sector," Thompson says.
"We’ve found buyers are now placing a premium on builder reputation to ensure certainty on the project outcome and a high quality finish."
33 Manning Street, Milton
The majority of buyers at 33 Manning have been local owner-occupiers who already know and love the area, however Thompson says recently they are seeing the re-emergence of first home buyers seeing what is ahead for values across Queensland.
Consolidated Properties Group have had similar success at their recently launched Monarch Residences in Toowong.
They've sold over 100 apartments in sales having only launched just a few months ago.
Consolidated Properties Group Head of Residential James MacGinley says there's more activity at the top end of the market in recent years, and the price range for luxury property has become broader.
"Monarch Residences project in Toowong has an average price point of $1.9 million and we’ve sold over 100 apartments in the two months since launch, including nine apartments priced at more than $4 million," MacGinley says.
There's been strong early interest for the 11 penthouses which Consolidated have just launched. They range in price from $4.15 million through to $12 million.
MacGinley says the key to selling in the current market is really understanding the buyer demographic.
"At Monarch Residences, we have split our penthouse collection between the top floors and the lower level along the riverfront.
"This decision was made to appeal to two distinct groups of buyers - those wanting a traditional penthouse with horizon views, and those looking for a ‘river home’ with the benefits of apartment living.
"This market-led approach to design is something we employ across all of our residential projects which ultimately underpins sales success.”
Melbourne and Brisbane developer Kokoda Property is pushing it's foot down on the Brisbane market. In May they paid a record $100 million for a 17,600 sqm site on the waterfront in Teneriffe, the last remaining riverfront site in the affluent suburb.
They're planning a huge $1.75 billion mixed-use precinct on the Skyring Terrace block. They've also recently submitted plans for a Cottee Parker-designed tower in Milton, near their recently completed The Ambrose by Kokoda, where just the penthouse collection remains.
Kokoda Property Founder and Managing Director Mark Stevens says buyer sentiment remains strong within the Brisbane market due to tightening supply across the country.
"Brisbane, in particular, has witnessed an influx of interstate and student migration, resulting in a significant shortage of houses on the market.
"This current climate signals a fantastic investment opportunity not only for developers launching new projects, but also in support of the great yields that properties are achieving for both investors and owner occupiers between 2019–2023."
Longtime Brisbane developer Gardner Vaughan Group are steadily selling down their current Brisbane projects, but at a controlled pace given the fluctuations in build costs throughout the construction phase.
Sam Gardner , Gardner Vaughan Group's Director of Finance and Sales, says there's a lot of fence sitters at the moment, in particular in the owner-occupier market.
"It’s not necessarily a case of a problem with the product, or the price, it’s a mixture of market pressures.
"Really, the biggest concern from buyers at the moment is; is the building going to get built, will it start, will it finish.
"Being a developer builder certainly helps, and this is why we really focus on our sod turning ceremonies, one of which is coming up at our Stones Corner project.
"Other feedback is of course the interest rate rises which has hampered how much people can borrow. People have too many reasons to not make a decision at the moment, but that will change as demand further outstrips supply.”
Read last month's City Beat May 2023 report here.