Experts put inner-ring suburbs on the ‘avoid’ list as unit oversupply cripples Brisbane’s inner city
As the number of apartments under construction increases, pockets of Brisbane are feeling the effects of excessive stock.
“In Brisbane, the areas of Fortitude Valley, Teneriffe, Newstead, South Brisbane and West End are seeing a massive surge in new unit supply at the moment,” says Cameron Kusher, research analyst at CoreLogic.
“There’s clearly been an oversupply because properties sell for less than what they were purchased for. Now, people have been paying too much then having to resell it at a loss. I think we’ll continue to see [the trend] grow… I wouldn’t be surprised at all given that there’s a lot more stock under construction. So we’ll see higher levels of loss upon resale of units, particularly in the inner-city areas.”
This situation is especially problematic due to the lack of job creation in these areas, Kusher says.
“Realistically, we’d be avoiding suburbs and property types within 5km of the Brisbane CBD,” adds Paul Glossop, director of Pure Property Investment.
Regional areas offer value
As the capital struggles, business looks to be picking up in the countryside. According to the Domain Group’s regional house price report, Ipswich’s house market recorded the most growth across Queensland in the March 2017 quarter.
“Brisbane people are looking for better value, and they can see it here,” says Gillian Dargusch, agent at First National Karalee Prestige. She explains that buyers are looking for character homes that elude them in Brisbane.
Ipswich’s affordability has been the main factor in its resurgence as first home buyers and investors rush to capitalise on the low prices.
Thus, confidence levels in the state’s overall property market are rising, which is a good sign for Queensland’s economic development.
“Queensland’s property industry now has positive economic growth expectations, but debt finance availability remains a key concern,” says Chris Mountford, executive director of Property Council Queensland.
“The industry has responded positively to new government strategies aimed at getting better use out of surplus government-owned land, but more needs to be done to help job-creating projects stack up.”
Mountford adds that the region’s commercial property market is projected to perform well, with “positive capital growth expectations for the Queensland office market for the first time in three years”.
SUBURB TO WATCH
ASHMORE: Investors favour strong yields and affordability
In the suburb of Ashmore, the unit market is looking like a good deal for investors given its very high yields, affordability and growth potential.
The median unit price remains under $350,000, even with 8.5% growth, and rental returns are coming in at an average of nearly 6%. The suburb has also been maintaining a positive growth trend over the last five years, being part of the thriving Gold Coast region.
Ashmore has a lot of appeal for residents because of its proximity to the employment hub at Southport CBD, which is home to Chinatown, several schools, Griffith University and plenty of retail and commerce. Ashmore itself has several small shopping centres and various dining establishments.