Apartment oversupply in Brisbane could soon be a distant – if a little hysterical – memory, according to property experts.
Analysts Urbis have released their Brisbane Apartment Essentials report for the second quarter of the year, and things are looking a little brighter than six months ago; or as associate director Paul Riga put it: “the sun’s coming out through the clouds”.
His report showed that apartment sales within inner Brisbane were at a relatively steady volume (up to 311 sales from 302 last quarter) and the average sale price of new units was at an all-time high: $725,563.
In the past 12 months, unit prices have fallen across Brisbane and seemingly in response, construction approvals plummeted.
All sorts of predictions were made about the market, including a potential 10 per cent fall in rents by the end of the year.
Mr Riga said it appeared the fears were overblown, as the market was now correcting itself faster than the most hopeful predictions had anticipated.
“As we predicted in the previous quarters, our sales were steady,” he said. “That’s predicted to continue of the next few quarters as there’s very limited product coming through the pipeline.”
The spike in average price was attributed to several premium products selling well, but Mr Riga said it was still a good win for the market. Related: Brisbane rents predicted to fall 10 per cent in 12 monthsRelated: Biggest quarterly drop in prices in March since 2011Related: River city rental yields on the slide
“We’re still confident about the inner Brisbane market. It’s got the right fundamentals there,” he said. “This product is being absorbed in a better way than originally expected.”
Mortgage broker Red & Co’s Kieran Foster agreed with Mr Riga’s assessment that Brisbane was recovering faster than most expected.
“The market has self-corrected itself quicker than anyone had anticipated,” he said.
Mr Foster said mutual apprehension from the Brisbane City Council, buyers, developers, and banks caused things to settle down in a timely manner.
“The amount of new projects starting are coming to a grinding halt, with a lot of the ones under construction mainly sold I think it’ll level out,” he said.
The rental market was another indicator how the apartment market was doing, and Mr Riga said vacancy rates in the inner city were remaining low.
“The signs for new apartments are relatively positive. That indicates there’s a higher level of demand for new product over established product,” he said. “Overall, it shows that people are voting with their rental dollars. They’re taking and absorbing the product we’ve seen come through.
“We’re looking forward to see what the rental data from the June report shows when it comes through.”
Mr Riga said if the apartment market remained steady for the next two quarters, Brisbane could be out of the woods by the end of the year.