Brisbane’s apartment vacancy rate fell to just 1.6 per cent in March, driven lower by a slowing decline in supply and continued population growth.
Brisbane’s vacancy rate tightened by 0.6 per cent from the previous quarter according to a new report by property consultants Urbis.
Comparatively, the Real Estate Institute of Queensland (REIQ) recorded a vacancy rate of 2.1 per cent for the total inner Brisbane rental market over the same period, down 4 per cent from the previous quarter.
The figures from Urbis quarterly Inner Brisbane Apartment Rental Review highlights a market in transition, with many in the residential sector continuing to shift focus from investors to owner-occupiers.
“The combination of a slowdown in new rental stock hitting the market, as well as solid demand drivers such as population and infrastructure investment will continue to result in a tight market,” Urbis director of property economics and research Paul Riga told The Urban Developer.
“Considering both our in-house data and the total market data provided by the REIQ, the rental market in inner Brisbane is looking healthy.”
Brisbane, which saw unprecedented construction and sales several years ago, has since seen both rates rapidly decline, resetting to the pre-investor-boom market of the early 2010s.
Responding to market changes, many developers have had to downsize the scale of projects to meet the market and achieve pre-sales requirements, with many less likely to pursue high density projects in the coming years.
“Demand for quality projects certainly outweighs supply with a number of these projects registering growth in rental rates over the current quarter,” Riga said.
“This is likely to remain the case for the next six-to-12 months as purchaser activity remains subdued due to access to finance.”
Brisbane inner city vacancy rate new and established
“At the same time, any loosening of lending constraints should see the investor purchaser number start to rise, particularly with yields and rental rates strengthening and economic drivers remaining stable.”
Despite recent oversupply, Brisbane’s situation looks positive compared to the southern markets, with interstate interest continuing. More than 24,000 residents migrated to Queensland over the 12 months to September 2018.
Comparatively, New South Wales saw more people leave the state than arrive, registering an interstate migration net loss of 22,100 residents.
“Whilst there are a number of challenges in the development space, opportunity exists across multiple Brisbane sub-markets,” Riga said.
“We have seen boutique projects that have targeted a wide spread of buyers at affordable price points launch successfully, with buyers attracted to the price points, amenity and inclusions.”
Brisbane’s premium market is also seeing a flurry of activity, however Riga warned of risks for buyers in this market generally take longer to transact.
“This market of premium buyers is expected to sustain growth moving forward as our Brisbane market matures, and acceptance of the apartment lifestyle spreads across multiple demographics,” he said.
“Ultimately it comes down to ensuring that each development aligns the potential buyer market with the pricing and inclusions that they expect.”
Predictably, a significant portion of buyers spending $2 million-plus on apartments continue to be down-sizers, swapping the family home for a large inner-city apartment.
At the lower end of the market one-bedroom apartments have continued to remain popular with inner Brisbane renters.
Urbis found that one-bedroom, one-car space apartments had the highest average number of rental applications per apartment with the inner south and CBD recording higher rents on average.
Hopes are growing for the apartment market in the Queensland capital. A separate report by JLL earlier this year said Brisbane apartment prices and rents would stabilise over the next 12 months.
For now, conditions in Brisbane, the apartment construction market that was first to boom and also the first to decline, remain weak.
‘The margin will never be this close again’: Brisbane’s waterfront secret where property is still affordable
Think “Brisbane waterfront” and Moreton Bay darlings Wynnum and Manly quickly spring to mind.
But only 30 kilometres northeast, on the other side of the airport and a similar distance to the CBD, another bay-front suburb, Sandgate, appears.
The photogenic village topped Domain’s best performing Brisbane suburb list in 2018 with 18.8 per cent median house price growth.
Despite this overall rise in housing value, data-savvy local agent Jacqui McKeering makes the case that Sandgate’s waterfront properties are still undervalued compared to southside bay designer homes.
Ms McKeering, of Jim McKeering Real Estate, says Sandgate waterfront still remains great value because family groups have to buy further back to get more features.
“When the price-to-rateable-land-value gap narrows, you are getting a bit of a bargain,” she says.
“A simple calculation to illustrate this point shows the market value of Sandgate waterfront properties not that much greater than the rateable land value; on average 32 per cent greater.
“In fact one waterfront property sale, back in 2017, sold for 15 per cent less than the rateable land value, yet one block back and without bay view properties have a greater gap of 42 per cent.
“One particular [non-waterfront] property sold as high as 66 per cent greater than the rateable land value.
“The outtake here is there is plenty of money to be made on Sandgate waterfront properties.
“I do believe the margin between waterfront properties and the neighbouring streets will never be this close again.”
Flinders Parade, which runs along the foreshore of Sandgate and into Brighton, plus Eagle Crescent and Shorncliffe Parade, are the waterfront property strips in focus.
Ms McKeering says a lot of people have been buying these older houses and renovating and that at the moment there is some choice in “real cheapies” from about $900,000 to about $1.35 million.
“I know someone who bought for $1.4 million in 2017 with a $1.8 million renovation budget,” she says.
“When you see that sort of money coming into an area, it tells me people are seeing long-term capital value in this area.”
Fellow Sandgate agent Tamara Wecker of RE/MAX agrees suburb 4017’s waterfront properties are priced and selling considerably under their comparable Brisbane market values.
“When compared to Wynnum and Manly,” Ms Wecker says, “absolutely; I mean you can live in the Taj Mahal in Sandgate for about $1.5 million.”
She is seeing buyer migration from Sydney and “a little bit from Perth” because of affordability, and thinks Sandgate’s strict rules, which prohibit multi-unit developments on its waterfront, is a further drawcard.
“People tend to think of Wynnum and Manly but here you can have a premium home and lifestyle only 30 minutes from the city,” Ms Wecker says.
“To be honest, it has been a bit of a secret because we are off the highway so you have to have a reason to come here, but that is changing in the past 18 months.
“We are getting more inquiries from people, even from Brisbane, who just did not know about us.”
Mark Crew has been selling Sandgate housing since 1990 and thinks people have woken up to how great a suburb it is in the past 18 months.
The Professionals’ agent has reported strong interest from Sydney buyers “looking for a better family lifestyle”.
He estimates 25 to 30 per cent of Sandgate buyers this year have come from the neighbouring suburbs of Shorncliffe, Deagon and Brighton; people who want to upgrade but stay in “the village”.
“It is 31 minutes to the CBD and you can be walking on the waterfront with your kids after work and we’ve got excellent schools too,” Mr Crew says.
Regarding Sandgate’s waterfront property market and its value, he says three factors should be considered.
“There are few waterfront properties for sale, land is scarce and over the past 20 years there has been a lot of change to the houses themselves, a lot of renovation and/or raising older three-bedroom cottages and transforming them into often substantial five-bedroom luxury houses,” he says.
“So these houses on their waterfront blocks are, quite rightly, going to fetch more in sale prices when they do one day return to the market; and that is showing.”
Cheap Units In Brisbane Suburbs
Twelve suburbs in Brisbane have a median unit price of just under $400,000, according to Domain’s June House Price Report.
Ten out of these 12 suburbs are in the inner city, the report said.
Bowen Hills, Fortitude Valley, Albion, and Spring Hills are all within three kilometres of the Brisbane CBD. The median unit prices in these suburbs are below $400,000, the figures showed.
East Brisbane, Coorparoo, Clayfield, Nundah, Taringa, and Kedron also offer some of Brisbane’s cheapest unit values, according to the report.
Bowen Hills is the cheapest suburb to buy a unit, with prices falling 13.7% in the past 12 months, the figures showed.
Here are Brisbane’s cheapest suburbs to buy units by median price, according to Domain:
|Suburb||Median price||YoY % growth||5-year % growth|
In Greater Brisbane, the median unit price fell 8.6% over the year to June, according to the report.
The capital city’s unit prices are “sitting at 2013 levels”—down from their peak in 2015, according to Domain research analyst Eliza Owen.
However, prices are expected to bottom out this year, with the end of the downturn in the unit segment in sight, Owen said.
“Unit listings are also moderating, which should reduce downward pressure on prices,” she said.
Brisbane Prices Could Be Headed For Recovery
Brisbane prices are at their lowest level in the cycle, according to the latest national property clock from Herron Todd White (HTW).
The house values in Brisbane, Bundaberg, Ipswich, Rockhampton, and Toowoomba were at the bottom, according HTW.
Meanwhile, prices in Cairns, Gladstone, Mackay, Townsville, and the Whitsundays are starting to recover, the data showed.
There was momentum for the price growth in Brisbane, given that the capital city had been “bouncing along the bottom for some time now”, HTW Brisbane managing director Gavin Hulcombe told The Courier-Mail.
“I think it will be (a) steady rise, but my suspicion is in a couple of years’ time we might look back and think it (now) probably wasn’t a bad time to buy. Some areas are likely to perform better than others,” he said.
Brisbane units are also at the bottom of the price cycle, along with Bundaberg, Ipswich, Mackay, Rockhampton, Toowoomba, and the Whitsundays, according to HTW.
Apartment prices in Cairns, Emerald, Gladstone, and Townsville are already rising, the figures showed.
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