Quality, Not Quantity For Brisbane Apartment Market: Urbis

Brisbane’s new apartment market posted a mixed performance in the December 2016 quarter, with slower sales overall but higher sales of bigger, more expensive product, according to new research released by Urbis.

With 480 recorded new apartment sales in the December 2016 quarter, the Brisbane new apartment market saw a significant drop in sales from the previous quarter.

Urbis Associate Director of Property Economics and Research Paul Riga said that fewer project launches once again helped supply and demand stay within reach of each other.

“Only four new projects launched this quarter across Inner Brisbane, down from 15 projects in the previous quarter – the lower number of launches very much driving the decreasing sales,” Mr Riga said.

Mr Riga said that despite the slowdown in sales, the total number of sales for apartments with three bedrooms or more doubled, making up around 15 per cent of total transactions.

“In the first quarter of 2016, only 11 per cent of sales recorded were owner-occupier sales. We have seen this proportion increase steadily throughout 2016, recording close to upwards of 30 per cent of current transactions.

“It's very clear that while the investor market has declined, the owner-occupier market - albeit a smaller market - continues to grow,” he said.

Inner Brisbane prices continue to grow
For the second quarter running, the Inner Brisbane precinct’s weighted average sale price registered an increase of $46,618 over the previous quarter, ending the December 2016 quarter at $673,281. This is the highest ever recorded weighted average sale price for Inner Brisbane, driven heavily by the increase in higher price-pointed product.

“We are seeing supply come down to meet demand. However, we are also seeing a change in supply and a change in what consumers are looking for," Mr Riga said.

The number of new apartment developments approved dropped to a level like that seen at the beginning of 2014. “In the December 2016 quarter, only 1,496 apartments were approved – compare this to 5,521 apartments one year ago.”

Mr Riga noted that within those apartment approvals, the push towards an owner-occupier product was also evident, with select precincts within the Inner Brisbane registering up to 13 per cent of apartments in approval status as three-bedroom products.

However, the staple configuration remains the two-bedroom, two-bathroom apartment, which represented 49 per cent of total sales, and the bulk of future supply. However, this trend may change as more of the projects currently under construction settle into the market.

“With the delivery of increased apartment product throughout 2016, the market is now starting to change. The focus is clearly not all about interstate investors any more; it is now shifting back to locals and owner occupiers.

“Understanding what this market wants is key as they will be the drivers of the Inner Brisbane apartment market into the future,” Mr Riga said.