Shrinking supply line to end stigma around Brisbane apartments

The stigma around Brisbane apartment oversupply may soon disappear as the number of available properties shrinks.

Brisbane unit prices tumbled in 2016 due to a flood of sales and few buyers but Place Advisory’s latest apartment report suggests a looming undersupply of stock.

The stigma around Brisbane apartment oversupply may soon disappear as demand and limited new developments causes the number of available properties to shrink.

Brisbane unit prices tumbled in 2016 as the glut of predominantly investor grade apartments flooded the market to be met by few buyers.

But Place Advisory’s latest apartment report shows the $79m worth of apartment sales in the second quarter of the year could soon create an undersupply of stock. Only 10 new or off-the-plan four-bedroom and penthouse apartments remain on the market across the city.

Demand in the CBD for high-end property drove a majority of the sales through the second quarter, with half of the 10 sales in the three months to June priced at more than $1.2m.

Now, only 13 per cent of the new stock coming on to the market is available for sale.

It is a similar situation across the city. Only 11 per cent of the total new apartment supply north of the river is still on the market, while 11 of the 22 projects on the city’s southside have 10 or less units available.

According to International real estate firm Knight Frank’s latest Prime Residential Review, Brisbane is facing 62 per cent less new apartment stock in prime, inner city regions over the next five years as the supply promised by developers dwindles.

The company’s head of residential research Australia Michelle Ciesielski said limited availability would likely rid the perception of oversupply in the city but she does not believe scarcity will push up prices just yet.

“It is likely prices will hold. There is too much uncertainty to say prices will go up too much,” Ms Ciesielski said. “Brisbane has kept up and delivered on configurations but it’s about taking it to the next level in quality to attract international attention and buyers from Sydney and Melbourne.”

The June quarter of 2020 performed higher year-on-year for new and off-the-plan sales despite the pandemic lockdowns.

However, the weighted average sale price through this period dropped by 12 per cent compared to the same time last year to $736,449 as buyers tended towards smaller and cheaper stock

The Place Advisory report found the Brisbane unit market had fared quite well through the pandemic compared to other capital cities.

“Promising performances from standout projects and data relating to changes in dwelling values show that Brisbane has been far less affected by the impacts of COVID-19 when compared to the other major capital cities,” it said.

Ms Ciesielski said a similar trend was also emerging in Sydney, flagging the prime market would see an ongoing undersupply of new stock as prime regions face a 61 per cent fall in the number of apartments to be built over the next five years.