Brisbane property prices set to rise says BIS Shrapnel
According to the latest BIS Shrapnel Residential Property Prospects 2016 – 2019 report, property prices in most of the major capital cities in Australia are expected to fall over the next three years. However, there’s good news for investors and home buyers in Brisbane, as prices here are expected to rise.
This price decline, reports BIS Shrapnel is derived from an oversupply of new homes, weaker investor demand, alongside lower population growth. However, it is important to bear in mind that the oversupply is more targeted and does not apply to every suburb in every city.
Both Adelaide and Darwin is forecast to see the house median price fall by 2 per cent by June 2019, whilst the median house prices for Sydney, Melbourne and Perth are expected to fall by 1 per cent over the next three years.
The last few years have seen both Sydney and Melbourne experience an extraordinary level of growth and this growth has now started to slow down as both cities come out of peak and enter the downturn of the property cycle.
BIS Shrapnel senior manager Angie Zigomanis said that the rate of growth in the cities was slowing while a boom in apartment construction created a “disconnect” between supply and demand.
“Nearly all capital cities are building apartments at record rates on the back of the recent strength in investor demand. As these projects are progressively completed, it is likely that there will not be enough tenants in a number of cities to support rents and consequently values upon completion,” he said.
BIS Shrapnel forecasts a record 220,000 new dwellings began construction in 2015-16, which will turn into a peak in new completions this financial year.
Of these 220,000 new dwellings, a massive 49 per cent are expected to be multi-unit dwellings, whilst many new dwellings are part of larger apartment projects which have longer construction time frames. This will mean that a high number of completions are expected to occur during 2017-18.
The only state that is expected not to experience apartment oversupply is NSW.
“Nearly all capital cities are building apartments at record rates on the back of the recent strength in investor demand,” Mr Zigomanis said. “As these projects are progressively completed, it is likely that there will not be enough tenants in a number of cities to support rents and consequently values upon completion.”
However, not everyone is of the opinion that apartment oversupply is a major problem.
CEO of iBuyNew, Mark Mendel says, “It’s true that in some areas of our major capital cities, we are seeing an oversupply of new apartments that are completing at the same time, but the extent of the oversupply is overstated. You need to bear in mind that a number of proposed developments will never eventuate due to developers unable to obtain finance. However, there are still handfuls of pockets, where you can buy new property and achieve a high amount of growth, you just need to know where to look”.
“Furthermore, we anticipate seeing a slowdown in new developments being brought to the market so it is anticipated that while there is an oversupply in some pockets around Australia today, through population growth and slower release of new developments, the oversupply issues will be short lived.”
So, how does each state compare? Here is an insight from BIS Shrapnel as to what could be expected over the next three years.
Sydney and Melbourne both have a high level of demand, with investor demand a key driver to both of these property markets. For Sydney, this financial year is expected to see a slight amount of growth, and nowhere near as high as what the city has experienced these last three years which saw strong price growth.
By June 2019, Sydney’s median house price is thought to be 1 per cent lower than today’s level, whilst the median unit price is forecast to fall by 5 per cent by June 2019.
In Melbourne, there is a high amount of new dwelling construction for apartments. However, these tend to be found within inner-city Melbourne and the CBD, rather than throughout the city. It therefore pays to do your research and look at which areas do have an oversupply of apartments, or will have an oversupply in the years to come. In this case, it might be better to avoid the inner-city and focus more on the middle-ring suburbs.
By June 2019, BIS Shrapnel has forecast that median house prices will fall by 1 per cent, whilst the median unit prices is expected to fall by 8 per cent in the next three years.
For those who buy in Brisbane, then investors and home buyers will see the median house price rise by 7 per cent by June 2019. Property is still relatively affordable here, but again you need to be careful where you buy and try to avoid areas that are already seeing high levels of apartment construction.
Brisbane is one of the fastest-growing capital cities in Australia in terms of population and employment. Currently, more than 2 million people call the Greater Brisbane region their home, and the Queensland Government has forecast that Brisbane’s population will grow to nearly 3 million by 2031. With such a high demand, it is anticipated that an additional 156,000 new dwellings will be required in Brisbane by 2031, as stated in the Brisbane Economic Development Plan 2012-2031.
Sydney and Melbourne are also expected to see large increases in population in the next two decades, fuelling the need for new dwellings to cater for this increase in demand.
It is important to remember that a property purchase is a long term investment. It is perfectly normal for property prices to go up and down – it’s all part of the property cycle. However, some areas go up in value more than others, so timing the cycle right will put you in a better position.
To find out more about where you should be purchasing property right now, then it is best to speak to one of our expert Property Consultants at iBuyNew. We can guide you through the property buying process and help you avoid buying in areas that are expected to experience oversupply.
Call us today on 1300 123 463 to learn more.