26 May 2016

26 May 2016
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Current apartment sales will be the “bellwether” for Brisbane’s off-the-plan apartment market.

Urbis economic and market research director Malcolm Aikman said buyer demand had dropped from a peak of 2277 apartments in the June 2015 quarter, to 1032 sales in the March quarter 2016, but there was about three quarters worth of supply as well as significant product proposed to come to market this year.

“We are at a crossroads, and the next quarter will be a bellwether on how the market performs”.

The Urbis Brisbane Apartment Essentials for the March quarter 2016, released today, found that project slippage had been prominent, with a number of expected launches pushed back to later in the year, and some not coming to market in this cycle.

There were 24 projects launched in the quarter, equating to 2463 new apartments, however another 1243 apartments expected to launch were pushed back.

Mr Aikman said developers were finding it harder to get funding for projects, and banks had “put the brakes” on investors’ ability to borrow.

“We have seen (project) slippage now for a few quarters, so that’s what we’re expecting as the market was getting a sense of what the volume of supply was, and starting to feel the pressure from banks and rising construction prices,” he said.

“That’s why I think the next quarter will be interesting to see how many projects have slipped, and how many sales we do.”

The Urbis report expected 2920 new apartments to launch in the second quarter, rising to 3485 expected to launch in the third quarter of 2016.

I think we are going to see a continuation of the gentrification over the next few years.

The CBD was the only precinct out of the six within inner Brisbane to record an increase in transactions in the March quarter, however the 64 per cent jump was due to the launch of the 184-apartment Mary Lane project.

More than 8000 new apartments are expected to be launched from the June to December quarters, with Fortitude Valley (1747 apartments) and Newstead (991) dominating pending supply.

Mr Aikman said four large projects in Fortitude Valley, including the 686-apartment The Gregory, and the 590-apartment 100 Barry Parade, played a significant part.

“It’s going to change Fortitude Valley quite significantly, I think we are going to see a continuation of the gentrification over the next few years,” he said.

The Urbis quarterly report monitored 157 projects across inner Brisbane, with 89 surveyed. The quarter saw a weighted average price of $595,664 — $31,189 less than the previous quarter — with two-bedroom, two-bathroom stock the most popular product.