Against a backdrop of stalling property markets in Sydney and Melbourne, Brisbane’s apartment market is set to stabilise as positive economic conditions and population growth pick up supply.
Brisbane’s apartment market is the most advanced Australian capital in the cycle, with supply levels peaking in 2016.
About 6,000 apartments across 34 projects are under construction in inner Brisbane, with 20 projects currently in the marketing phase, according to data revealed in JLL’s Apartment Market report for the third quarter.
An unfavourable lending environment and negative sentiment means commencements are expected to remain subdued over the short to medium term. Nonetheless, JLL is largely upbeat about Brisbane’s apartment market.
“In terms of pricing in Brisbane, existing apartment prices have fallen by just over five per cent since their mid-2016 peak, but have now shown strong signs of stabilising,” JLL head of residential research Leigh Warner said.
“For new stock, resales data shows that over half of resales occurring are below the initial pre-sale contract price, but this too is stabilising.
“Further, there are still many examples of quality projects in the market than are achieving positive resales growth.”
The worst ‘likely to have passed’
As new and residual supply is absorbed, market conditions are expected to remain challenging although the “the worst is likely to have passed”.
Brisbane’s experience should provide a window view into what Sydney and Melbourne can expect over the next 12 to 18 months, Warner says.
“Supply in Brisbane peaked in 2016 and fear of a hard landing and significant repricing was very high through that period and 2017.
“Conditions have undoubtedly been tough in Brisbane, but nowhere near as bad as many expected.”
“Rental vacancy rose, and rents have come under some moderate downward pressure, but vacancy is now falling and rents are stabilising.”