Apartment numbers take their toll on inner city Brisbane

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Brisbane’s inner city apartment market appears to be feeling the impact of the oversupply concerns that it has been dogged by in recent times.

Figures from the Real Estate Institute of Queensland (REIQ) show that over the June quarter, the vacancy rate for the apartment market in Brisbane’s inner city ring, which stretches 0-5km from the CBD, sat at 3.7%.

That mark means the rental market for inner city apartment is considered weak by REIQ standards.

In comparison, the vacancy rate for apartments in the middle ring, which stretches 5-20km from the CBD, sat at 2.7% over the June quarter, which meets the REIQ’s criteria for a healthy rental market.

For houses, the inner city vacancy rate sits at 3.4%, which classifies it as healthy, while for houses in the middle ring the vacancy rate is considered tight at 1.8%, while Brisbane’s overall vacancy rate in the quarter was 2.5%.

While the vacancy rate in the inner city apartment market is at present is likely to be of concern to landlords, REIQ chief executive officer Antonio Mercorella believes demands for housing in the area will improve soon.

"With major projects, such as Queens Wharf and Howard Smith Wharves, creating thousands of jobs over the next few years in Brisbane's inner city we are confident demand for housing will continue to grow,” Mercorella said.

“We are seeing steady levels of supply and equally steady levels of demand for inner-city apartments and we expect vacancy rates will hover around these levels for some time to come,” she said.

Moving away from Brisbane, rental markets in other areas of south east Queensland appear healthy.

On both the Gold Coast and Sunshine Coast, vacancy rates improved from 1.5% to 1.4%, while a vacancy rate of 1%, the state’s lowest, was found in both the Caloundra and Maroochydore regions.

“With significant dwelling construction taking place on the Gold Coast we expect to see some easing of conditions in the medium term future, however for the foreseeable short term, rental conditions will remain tight,” Mercorella said.

“The Sunshine Coast market is also tight, and with little new construction slated we expect this to continue for some time to come.”

Other tourism areas also saw improvements over the quarter, with Cairns’ vacancy rate dropping from 2.1% to 1.9%, while the Whitsundays saw its vacancy rate plummet from 10% to 6%.

In the state’s other regional markets, conditions are still far from ideal but there are signs of improvement.

In Gladstone, the vacancy rate dropped from 11.3% to 10.2%, while in Rockhampton it fell from 6.9% to 6.5%.

Over the quarter, Mackay’s vacancy rate fell from 8.1% to 7.7% and in Townsville the vacancy rate improved from 6% to 5.7%.

Bundaberg was the only regional market to see an increase in its vacancy rate, with it increasing from 5.2% to 6.3%.

Despite Bundaberg’s rise and the other regional markets still struggling, Mercorella said the June quarter was a positive for the state overall.

“Overall, there has been more good news than bad in this vacancy rate report and we’re optimistic that the state is moving towards healthier rates across the board.”
 

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