| First a quick heads up…
I have teamed up with my colleague Paul Broad to do two things: firstly, to provide a very focused project advice consultancy service and secondly to author a series of detailed new projected-related reports covering the east coast housing markets.
1. Project Advice Service
Our partnership is designed to help get your project right – through advice and collaboration – as to the type of residential project best suited to the area’s population and demographic characteristics, the site’s locational attributes and prevailing market conditions.
Collectively we have helped over 1,000 new housing projects. We have been in this business for 30 years.
Check out our website and see how we can help you.
www.projectadvice.com.au
2. Inner Brisbane Apartments
Much has been written about the apartment market and the perceived state of play of inner Brisbane apartments. Like most things in real estate, hyperbole is the order of the day, with the recent boom and current doom being exaggerated.
Our research has found that inner Brisbane is now struggling to keep up with the underlying demand. That isn’t a typo. I repeat it is heading for an undersupply.
The recent oversupply of new apartments has been shortlived. The main reasons for the quick ‘oversupply to undersupply’ reversal include growing demand to live downtown and the swift contraction of new apartment supply.
Let’s look at the demand side of the equation. The official population forecasts for the inner Brisbane area are way below recent trends. We estimate, based on the last decade, that there is a need to build 6,000 new dwellings each year across inner Brisbane. Nearly all of these new dwellings will be apartments.
This forecast applies for the next ten years. But we think the need will be greater, especially now that Brisbane City Council has effectively said NO to infill suburban development.
On the supply side, there are 185 new major apartment projects proposed across inner Brisbane, totalling around some 48,250 apartments. However only 30% of this stockpile is under construction and an addition 17% or about 8,000 apartments are probable over the next two to three years.
Over half of the currently proposed inner Brisbane apartment stock is unlikely to commence anytime soon.
Further good news is that inner Brisbane’s available apartment rental supply is now falling. This contraction has been quite sharp. Many of Queensland’s recent interstate migrants from Sydney are young couples trying to make a new start in Brisbane. They are mostly renting new inner city apartments.
Now we aren’t going for spruik here – and no doubt there is some sorting out still to do – with, for example, apartment prices still falling for one-bedroom and two-bedroom apartments. However, prices are now rising for larger apartment stock. A similar trend can be seen when it comes to weekly rents.
Importantly the rate of price fall for the smaller one and two bedroom stock is now braking and hasn’t been as bad as many commentators predicted.
And whilst last year most apartment sales – both for new stock and resales – sold to investors, this is now changing on two fronts – less interstate investor interest and more locals buying as owner residents.
Apart from a few hot spots, overseas buyers have never really had that much interest in buying in Brisbane. They seem to stick to Sydney and Melbourne.
All real estate obeys a cycle – and as we noted a few weeks back this cycle runs on short, medium and long term time frames. The short-term cycle is about supply and demand; the medium term is about structural changes like zoning and population policy and the long term concerns economic, social and demographic trends.
The Brisbane inner city apartment market gets a tick for all three cycles.
We believe that the inner Brisbane apartment is stronger than most think, and whilst it is unlikely to rebound anytime soon, there is, in the right circumstances, a sound business case to be made for building more apartment stock across inner Brisbane. |
