Brisbane sees decline in new apartment launches
If you thought that Brisbane had an oversupply of apartments, then think again. The number of new apartments in Brisbane expected to launch between now and June 2017 has rapidly decreased by 25 per cent due to developers struggling to get funding or are encountering delays with the planning stages.
Like other Australian cities, Brisbane has faced concerns of an oversupply of new apartments coming to market, especially in the next couple of years. However, according to the latest data from Urbis, the number of apartment sales in Brisbane saw little increase during the September quarter. The data also shows that the number of planned apartments has also declined.
According to Urbis associate director Paul Riga, a total of 19 new projects are expected to launch between October 2016 and June 2017. This will bring approximately 3,600 new apartments to the Brisbane property market.
In spite of this, last quarter’s data estimated that 31 developments would launch during this timeframe, bringing 4,856 new apartments to the market. This works out as over 1,200 fewer apartments.
What is delaying developments from launching?
So what is causing a hold up of developments launching? Mr Riga suggests that funding is one key issue alongside longer planning. “It is either that the planning side of things is taking longer or they need a certain level of funding and can't get it."
This quarter saw 15 new projects launch across the Inner Brisbane region, compared to 21 projects that were launched in the previous quarter.
As the banks continue to toughen up their lending, this is limiting the number of developers who can get approved for funding. Currently, developers that have long and solid track records alongside a good balance sheet are far more likely to win over the major banks. Another option which could help a developer launch their project is to secure alternative funding instead.
Because of the stricter lending conditions in place, it is very likely that a number of planned projects will not advance any further, which will cause a greater undersupply in Brisbane’s already undersupplied property market.
So what does this mean as a buyer? As a buyer, no matter whether you are an owner occupier or an investor, it pays to do your homework and know exactly what you are buying, where you are buying and who you are working with. Now is a good time to buy a property in Brisbane. The population is continuing to increase, property is still affordable and interest rates are at an all-time low. Developers are also offering incentives such as free stamp duty or 5% deposits to help get their number of pre-sales across the line, whilst first home buyers can still benefit from the increased first home owner grant (currently $20,000).
Developers can afford to offer these incentives initially as once they reach their pre-sales target this is when they can start to increase the price of their apartments as they have the go-ahead to build, and this is where they will start to make the real money.
To increase your chances of buying a property off the plan that will proceed, it’s best to ensure the following:
1) Use a reputable developer Be sure to work with a reputable developer who has a good amount of experience building off the plan developments. Research their past projects and whether they were completed on time and to quality.
2) DA Approved Buying into a development that has been given DA approval will increase the chances of this development going ahead in the first place and shorten the timescale to completion.
3) Buy in an area that is in high demand, but limited supply Choose the location carefully. The inner city areas of Brisbane have seen a lot of new development recently, so you might be better off looking slightly further afield within the middle ring areas for cheaper property and less supply.
4) Buy comfortably within your budget Make sure you also stick to your guns and buy comfortably within your budget. Remember that you too will also need to be approved by a bank or lender for a loan come settlement. By the time you settle, lending restrictions could still be tough or interest rates may have risen so you might need to put down a larger deposit.
5) Speak to a Property Consultant It’s best to speak to a Property Consultant at iBuyNew. We can assist you with finding a property in Brisbane to suit your budget, built by a reputable developer in a strong growth area.
With Christmas and the end of the year fast approaching, now is a great time to buy. With more incentives available and less competition to go up against, it is very likely you can secure yourself a decent apartment at a fantastic price. Just make sure you use a reputable developer that has DA approval and is building in an area that has high demand, but limited supply.
With fewer developments being approved, Brisbane will face a shortage of properties, especially as the population is expected to double in just 15 years from 2.2 million in 2015 to 4.6 million expected by 2031, whilst more than 223,000 new homes are required over a 30-year period.
To learn more about where you should be buying property in Brisbane, get in touch with the iBuyNew team today by calling us on 1300 123 463.
Published on 29th of November 2016 by Marty Stanowich