15 Feb 2016

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PICTURE: Allie Gilfedder on the rooftop of her West End apartment building in Duncan Street. Photographed by Tara Croser.

This could be the Year of the Renter with experts warning “massive” residential oversupply could hit some parts of the River City.

Thousands of apartments were expected to sit in development limbo over deteriorating rental and funding conditions, with a massive 50,000 in the pipeline.

University of Queensland property economist Dr Lyndall Bryant warned the development numbers were too “massive” for the city to absorb without rents dropping and yields shrinking.

Around 10,000 “near-city” apartments were in construction now, she said, but the inner-city had 15,000 approved and 15,000 waiting for approval, with a further 8,000 apartments “mooted”.

If all these properties go ahead there will be an apartment oversupply and it’ll be a tenants’ market for the foreseeable future.

“If all these properties go ahead there will be an apartment oversupply and it’ll be a tenants’ market for the foreseeable future.”

Properties had already begun offering free internet and a month’s free rent in West End – one of the hot spots in the future supply pipeline alongside South Brisbane.

Paul Riga of industry analysis firm Urbis said the market was already cutting back supply.

“The rate of new launches coming to market has certainly subsided in the last three months,” he said. “Now we’re seeing numbers being pushed back. There’s clearly been project slippage.”

The good news for Brisbane investors and landlords, he said, was “there’s not going to be as many as initially thought”.

His prediction was “in six months expect 4,000 new apartments to hit the market, and by nine months another 3,000 on top of that. It’s a massive difference to the large numbers in future supply”.

And, he said, even if rental yields dropped, it would still be competitive with Sydney and Melbourne – around 4 per cent.

Residential Tenancies Authority figures show Queensland’s median rent has not moved from June 2012’s figure of $350 a week.

Thousands of apartments were expected to sit in development limbo over deteriorating rental and funding conditions.

Real Estate institute of Queensland President and Bees Nees City Realty head Rob Honeycombe:said rampaging demand was absorbing current construction, but the large development pipeline was a concern.

“People are wanting to move to these suburbs in huge numbers … for those of us on the ground the gaining momentum is obvious,” he said. “But rents are already softening. Vacancies are growing. And when you consider our Cordelia Street example (set to rise from 481 apartments to just under 3000 in a little over two years) for landlords at least, the toughest times are still to come.”

Many buyers though, were blissfully happy with their South Brisbane peninsula purchase including Allie Gilfedder, who bought into Silverstone Developments’ Sassari Apartments in West End.

Her $400,000 apartment settled in August last year in an area where the median price was over $900,000, and she’s beating the odds as an owner-occupier.

“I love it, I couldn’t be happier,” she said of the activity in the area. “That’s kind of the whole reason why I decided to buy there, for the vibe and the development that’s going in. I’m not put off in the least, not in that particular area.”

She said children were “not on my radar” in terms of good schools in the area, but the restaurants and river were big pluses.

“Personally I’ve always loved West End. I used to live in Highgate Hill and getting into the location was big for me.

“The bigger picture plan for me is to turn my property into an investment. I worked with my financial adviser who provided forecasts of West End’s future capital growth and rental yields, and that was a big part of why I decided to buy off the plan 18 months ago.”