According to the latest Urbis Brisbane Apartment Essentials report
, both demand and supply started to slip away during the June quarter with a slowdown in the number of new apartments hitting the market.
During the June 2016 quarter, 810 apartment sales were recorded – the lowest volume since early 2014 and the third consecutive quarter of decline.
According to Urbis Associate Director Paul Riga, the decline in the number of apartment sales was expected; however, the reason for fewer developments proceeding was due to the market self-regulating.
“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”, said Mr Riga.
He continued, “Essentially the sales are still there but they are much harder to achieve for developers.”
Developers facing increasing construction costs
Developers are now facing increasing construction costs, as well as high development site acquisition costs within a competitive pricing market. Developers also need to consider creating a development that has a point of difference, whether that’s from good transport connectivity and close to lifestyle amenities, or have communal facilities such as lap pools, rooftop terraces and BBQ and dining areas as part of the development to help fuel demand and attract buyers and rental tenants.
As well as facing higher costs, developers are also facing tougher lending from banks. Those who may yet have to acquire the experience or are new to the industry are finding it particularly tough and may not even see their development go ahead as banks consider them a riskier investment.
Steady apartment sales to continue over next two quarters
Although 810 sales were recorded for the June quarter, Mr Riga expects this number of sales of around 800 to continue over the next two or three quarters.
Approximately 25 new developments are expected to launch between July and December 2016, which will add another 2,850 new apartments to the Brisbane property market. However, this number is only around half the amount of supply that was created within the market this time last year.
This however is not a bad thing as it gives the developments currently under construction within the Brisbane inner city residential market time to be absorbed into the market, without the high levels of new apartment supply being added all at once.
Low Vacancy Rates
Vacancy rates remain low sitting at 0.6 per cent during the March 2016 quarter across the inner Brisbane region, compared to the total inner Brisbane rental market which recorded 3.3 per cent vacancy rate for houses and units, according to the Real Estate Institute of Queensland (REIQ).
The Brisbane Apartment Essentials report also states that sales prices has also steadily declined since the end of 2015, especially for two-bedroom apartments. This is due to more properties being bought in more affordable areas of Inner Brisbane.
One Bedroom Apartments Proving More Popular
One bedroom apartments with one car park make up 34 per cent of the total property sales within the inner-city Brisbane region and this has increased from 27 per cent in March 2016 quarter, whilst two bedroom, two bathroom apartments still make up approximately 50 per cent of the sales.
The report also highlights that 162 projects were being sold off the plan, whilst roughly 70 per cent of these are currently under construction or completed. There is also an increase of low and mid-rise projects which made up 45 per cent of total sales during the June 2016 quarter, compared to just 17 per cent of sales in the March 2016 quarter.
New Apartments Require a Point of Difference
With Brisbane soon to be entering into its first apartment boom, rental tenants and buyers alike will be searching for properties that offer better value and higher quality, to give a point of difference, whilst are close to transport and lifestyle amenity.
If you are considering buying new apartments Brisbane then you may want to carefully look at where you buy for the best price, as well as what is nearby and what makes this development attractive.
Waiting to Buy New Apartments will Ultimately Become More Expensive
With the construction costs in Brisbane expected to increase, the longer you wait to buy in this growing Brisbane market, the harder and more expensive it will become to enter it. According to the International Construction Market Survey 2016, construction costs in Brisbane rose by 4 per cent over the last 12 months, compared to Sydney’s 3.5 per cent, whilst Perth and Melbourne recorded costs rise by 1 per cent. It is expected that construction costs within Australia during 2016 will rise by 2.5 per cent on average, compared to 2.9 per cent globally.
Whether you are an owner occupier or an investor, there are still good and affordable opportunities to be had. To learn more about our fantastic Brisbane apartment opportunities, why not get in touch with the iBuyNew team today on 1300 123 463
To find out more about why you should be investing in new apartments in Brisbane, make sure you read the following articles:
Published on 4th of October 2016 by Marty Stanowich