Driven by recent strong investor demand, Brisbane is set to be hit by a wave of new apartments in the coming years.
According to the Brisbane Apartment Market Indicators report for property services firm JLL, almost 20,000 new apartments will come on line in the Queensland capital over 2016-2018.
The report estimates that 19,800 apartments are currently under construction in the city, with 13,600 expected to be completed over 2016-2017.
JLL’s head of residential development valuations, Troy Linnane, said the investor demand that had pushed the construction surge had come from all corners.
“The Brisbane apartment market has continued to flourish off the back of strong investor demand, as interstate and foreign investors seek to take advantage of the lower price point and higher yields Brisbane currently has to offer compared to capitals like Melbourne and Sydney,” Linnane said.
“Interstate purchasers are currently dominating the market, accounting for over half of the off-the-plan apartment sales within the inner precincts, whilst foreign purchasers (25%) and local purchasers (22%) make up the balance over the past year,” he said.
While investor demand has been strong recently, JLL director of residential research, Rupa Ganguli, said that demand would likely drop-off in the near future and some developers are already anticipating that.
“We do anticipate the investor market will moderate over the next 12-18 months, as large numbers of new apartments enter the rental market during 2016-2017,” Ganguli said.
“Given the intensity of competition and future supply, some developers have moved away from the highly competitive investor stock and are focused on smaller owner-occupier projects where there is currently strong demand from couples seeking to downsize from their existing suburban homes and development funding is more readily available,” she said.
The predictions from JLL come less than a month after the Reserve Bank of Australia (RBA) released a Financial Stability Review warning of possible over supply concerns in Brisbane.
“While the housing market remains a long way from oversupply nationwide, some geographic areas appear to be reaching that point, particularly the inner-city areas of Melbourne and Brisbane,” the RBA said in October.
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