By Paul Riga | 18 Dec 2017

Vacancy rates for new Inner Brisbane apartments remained tight at 2.8 per cent over the September quarter 2017, according to new research released by leading property consultants, Urbis. 

The Urbis Inner Brisbane Apartment Rental Review found that new developments are out-performing older, established projects as demand for new apartment rentals remains strong.

The Real Estate Institute of Queensland (REIQ) reported a higher vacancy rate of 3.7 per cent for the total Inner Brisbane rental market over the same period.

Urbis Director of Property Economics and Research Paul Riga says, “The new apartment vacancy rate continues to show a similar trend to the REIQ total Inner Brisbane rental market, although new apartments vacancies remain tighter.

 “This is a positive result given that 2017 has seen another record high number of new apartments completing within the Inner Brisbane.”

The report found that the take-up of new apartment rentals has been strong, despite the large number of settlements entering the market.

“This is driven by a pent-up demand for inner city apartments that was not satisfied post-GFC, as well as shifting demographics within our city and a growing level of comfort towards apartment living.” said Mr Riga.   

Take-up of new apartment rentals has been strong, despite the large number of settlements entering the market

Evidence of the positive absorption of new apartment rentals includes the 42% increase in new bond lodgements for Inner Brisbane apartments over the last two years ending September 2017, equating to 21,740 new rental leases (Residential Tenancies Authority).

The report also revealed that enquiries for new apartments remain strong. There are no surprises that Generation Y residents (aged 20-34 years) appear to be favouring apartment living as they typically prefer low maintenance living in proximity to employment, education and lifestyle amenity.

What is surprising, however, is the increasing enquiry levels of other demographics, in particular Generation X residents (aged 35-44 years). Typically, this demographic is generally more focused on the development, developer and location status over price point.

Mr Riga commented, “Regardless of the stable level of interest, there has never been more supply. New buildings are taking longer to reach full occupancy, particularly in comparison to the take-up timeframes registered 12 months ago. This has resulted in a trade-off between vacancy and rental price decrease for owners.”

“While concern still surrounds the number of apartments under construction within Inner Brisbane, it is apparent that the market has begun to self-regulate and the supply of new projects selling off-the-plan is drastically decreasing.” suggested Mr Riga.   

The Australian Bureau of Statistics (ABS) New Dwelling Approval data indicates a decrease of 35% for new apartment approvals between 2015 and 2016, with a further decrease of 56% between 2016 and September 2017.

Driven by the relative affordability of the Brisbane property market, particularly when compared to Sydney, net interstate migration increased by 7% over the past quarter, ending March 2017.

Based on ABS data, net overseas migration registered even higher growth at 17% over the same period.

Mr Riga suggested, “As interstate and overseas migration to Queensland continues to increase, the outlook for new apartment rental absorption within Inner Brisbane remains positive.”

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