Although activity in the Brisbane property market has quietened slightly, it remains in good shape overall. Brisbane real estate is still performing well due to the continuation of low interest rates and relative affordability when compared to other capital cities.
While the Brisbane housing market is still extremely strong, the Brisbane unit market is starting to weaken.
As a result there are some market trends that Brisbane investors and property owners should be aware of.
Brisbane Property Market Trends
Firstly, Brisbane City Council is increasingly being called to rein in the approval of new developments.
Secondly, banks have tightened their lending policies.
Thirdly, there are increasing reports of developers struggling to complete pre-sales in order to secure funding to commence construction.
Fourthly, immigration to Queensland from overseas and interstate has slowed in recent years coinciding with a cooling in demand for property.
And lastly, the Brisbane property market has experienced huge uplift in the development of new apartments. For example, in 2014 there were around 4,500 development applications submitted to Brisbane City Council for approval. That figure was about 1,000 more than the norm of previous years. However, in 2015 and 2016 development applications have been higher again. With cranes already dominating the cityscape, the Housing Industry Association indicates that the number of building approvals in Queensland have increased by 6.7% over the last 12 months (September 2015 – September 2016). This means that there are still plenty of projects in the planning phase or waiting to come online.
What these trends mean
Although the above construction figures are high, the data on Brisbane’s unit and townhouse market presents strong results. Figures from Corelogic RP Data show this market performed strongly between February 2015 and February 2016 with prices up 4.5%.
The increase in these prices has been largely attributed to investors.
A large percentage of these investors are interstate and international buyers, who seem to be taking advantage of the many incentives that developers are offering. For example, several developments have a 4% to 5% cash rebate and/or rental incentive built into the purchase price, resulting in valuations below contract price.
It begs the question of whether these purchases are a good investment for the long term.
Brisbane Property Market Outlook
If an oversupply of apartments in Brisbane does occur it will potentially restrict capital gains and may even negatively impact yields as investors compete for tenants.
However, an oversupply can only happen when supply overtakes demand. In its current state the Brisbane property market is still performing well. Houses are in high demand and apartments are still selling.
Overall, the sage advice when it comes to investing in property never seems to change – Find the right property, and buy it at the right time.
It’s not an easy thing to do, but it is possible. And talking to the experts, like Blocksidge, is always a great place to start.