The completion of development projects is expected to introduce much new supply into Queensland, causing vacancies to rise
Brisbane has underperformed relative to expectations, with property prices increasing by just 0.6% over the November 2017 quarter.
“If investors are considering purchasing in this market, it may be prudent to set aside some extra cash as there is potential for the vacancy rate to increase due to [development] completions. This may lead to a possible oversupply in the investment marketplace,” says Century 21 Australasia chairman and owner Charles Tarbey.
“With this abundance of unit stock coming into the market and the increasing difficulties that are being faced by Asian buyers in freeing up money from their country for foreign investment, developers may increasingly offer strong incentives to buy their product.”
The oversupply of apartments in Brisbane is creating opportunities for buyers to get their hands on new dwellings at good prices as off-the-plan unit sales reach
Demand for detached housing is maintained by the inflow of interstate migrants, which could stave off oversupply problems for a while but not for long.
“The oversupply in the Brisbane apartment market will have flow-on effects in the house and land market,” predicts Angie Zigomanis, senior manager at BIS Oxford Economics.
“Falling unit prices will shift some buyer demand from the house market to the unit market, while easing unit rents will delay some first home buyer demand from moving into homeownership.”
The Coasts could pick up the slack
As the development scene in Brisbane gets crowded, interest has been shifting to the Gold Coast and the Sunshine Coast.
“Demand for land on the Gold Coast and Sunshine Coast has surged over the three years to 2016/17. Strengthening local economic conditions has attracted greater population inflows from both overseas and interstate,” says BIS Oxford Economics’ Outlook for Residential Land 2017–2022 report.
“Major non-residential construction boosted employment, while the fall in the Australian dollar improved tourism activity and overall supported better confidence in the market. In the case of Gold Coast, Commonwealth Games-related investment has also buoyed the local economy.”
However, Zigomanis believes these regions may be approaching their peaks, with lot production easing over 2016 to 2017. With this trend expected to continue into 2018 and 2019, growth will likely slow down as well.
SUBURB TO WATCH
SOUTHPORT: Prices rise in the Gold Coast
The CBD of the Gold Coast, Southport is a rapidly growing suburb with much potential for investors.
Both houses and units have recorded significant growth over the five years to December 2017. Nonetheless, units remain affordable at a median value of $375,174, with a strong average rental return of 5%.
Established in the late 1800s, Southport has become a bustling centre that houses the Australia Fair Shopping Centre and a plethora of restaurants. There is an ongoing initiative to enhance its appeal further through developments like the Queen Street Village project on the former site of the Gold Coast Hospital, including a retail complex, a medical centre and office spaces.
Southport is also home to the $2bn Gold Coast University Hospital, the city's largest public health facility.
Affordability: Apartments are low-priced in Southport, despite considerable positive growth
Amenities: Southport is a foodie paradise and a shopper's dream, with a range of shops and restaurants.