Brisbane's unit market was unable to record price gains in recent years due to a supply glut, but there are signs that the downturn might soon be over, the latest market analysis from CoreLogic shows.

The city witnessed an unprecedented level of unit completions in 2016, when 21,342 units finished construction. This was almost double the yearly average of 11,585.

The oversupply led to a decline in unit prices. In fact, Brisbane unit values in January this year remained 11.5% below their 2010 peak.

"It is worth noting that oversupply is very much a unit-centric story. Houses across Brisbane have actually seen quite strong capital growth returns in the past few years, except for a brief, cyclical downturn over part of 2019," said Eliza Owen, head of Australian research at CoreLogic.

However, it appears the tides are changing, given that unit approvals across Queensland have been slowing since 2015. Citing figures from the Australian Bureau of Statistics, Owen said 75% of state-wide unit constructions were concentrated in the Greater Brisbane metropolitan region.

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Recent quarterly data show that approvals are 46% below the decade average, which could indicate that the delivery of new units would likely be subdued starting this year, Owen said.

"The time series suggests that the lag between approvals and completions varies from about one to two years. CoreLogic project data suggest unit completions across Brisbane over 2020 will average about 4,000 per quarter, reflecting the long-term average," she said.

Another part of the price-growth equation is demand. Owen said Queensland needs about 8,000 dwellings to house the growing population each quarter to June 2021.

"With approvals data suggesting a decline in construction, and steady estimates of population growth, Queensland dwellings may fall into undersupply in the year ahead. Rental yields are also well above the capital city average at 5.3% gross, meaning there could also soon be a turning point in investor demand," Owen said.

The improvement in the city’s unit values indicates this likely turnaround. CoreLogic data show that Brisbane units have recovered by 2.2% since bottoming out in June 2019.

"This fits in with a more broad-based recovery, as reductions in the cash rate have reduced the cost of servicing debt, and increased incentive to purchase property," Owen said.

A recent report by Herron Todd White (HTW) Residential said the absorption of the unit oversupply during the 2015-2017 period is another good sign for Brisbane.

“Things have been looking up of late and with substance. This solid groundwork for a positive 2020,” the report said.

However, HTW Residential said detached housing is still the best property type to invest in.

"The basics indicate that buying a detached home within reasonable proximity of the city as best you can afford will be the surest approach this year. The flex points are you can travel further out but be nearby to public transport options, major services, and employment centres," it said.