Festive season slows sales, but investors still active in inner Brisbane apartment market

Of the 252 sales recorded in the quarter, 46% (116 sales) were in projects which had not yet commenced construction. Paul Riga, Director of Property Economics and Research, said, “Investor activity was still very much active in the Inner Brisbane apartment market, with newly launched projects registering solid transactions.

“Whilst opportunistic investors are still looking at completed projects selling down final stock, interest is still there for projects in the presales stage, particularly when there is a point of difference on offer.”

A sample of transactions in the quarter indicated that, despite regulation changes and difficulties accessing finance, foreign investor purchases made up over 40% of sales in the December 2017 quarter. Owner-occupier sales (29%), and local state investors (16%) highlighted that the local market is still active, whilst a relatively low level of interstate investor interest (12%) may indicate that Sydney’s investment push into Brisbane over the past two years is now on hold.

Interestingly there was a jump in the number of apartment approvals in the December 2017 quarter, with over 1,900 apartments approved compared to 672 in the previous quarter. However, these apartments were spread across four large projects.

“In 2016 over 11,000 apartments were approved in Inner Brisbane, whilst in 2017 under 6,000 apartments were approved.

“Of course, not all of these will reach the market, and certainly not in this cycle, but the slowdown in approval activity is in-line with current market conditions,” said Mr Riga.

The number of apartments that settled across Inner Brisbane in 2017 was 6,847, similar to 2016 which recorded 7,064 apartment settlements. However, a challenging selling market meant that project launches slowed. Only 1,636 apartments launched in 2017 compared to 6,065 apartments in 2016.

Mr Riga suggested, “Project launches are expected to remain low throughout 2018, which will bode well in the absorption of unsold product. Whilst not coming through in the sales numbers, Brisbane has a number of strong fundamentals.

“Population growth is on the up, investment in major projects is kicking up a gear and our rental market has survived significant supply entering the market. The outlook for Brisbane’s apartment market over the coming years certainly has many positives.” 

• 252 sales were recorded in the December 2017 quarter, down from 300 sales in the previous quarter.
• The weighted average sales price for the December 2017 quarter remained steady at $686,806.
• Sales by product type did not change much from the previous quarter. Two-bedroom two-bathroom product made up the majority of sales at 48% of total sales, one-bedroom one car apartments were the next best-selling unit type with 38% of total sales.
• Only two new projects yielding 332 apartments launched this quarter, very similar to project launches recorded in the previous quarter.
• Foreign investor buyers made up 43% of transactions, followed by owner-occupiers with 29% of transactions.