Unit surge to swamp city market
Pressure is mounting for Brisbane apartment vendors, with a wave of newly constructed units about to saturate the already falling market.
Unit supply in greater Brisbane is scheduled to grow by 20.4 per cent over the next two years, with 39,420 apartments and townhouses hitting the market, according to researcher CoreLogic, including 15,650 over the next 12 months.
Gavin Hulcombe, managing director of the Brisbane office of valuation firm Herron Todd White, said: “In extreme cases there are resales up to 30 per cent less than the off-the-plan price. What we are seeing is some of the secondary, lesser designed, lesser built apartments are not seeing price growth.”
Such fears have caught the attention of the Reserve Bank, which is monitoring developments for price drops, vacancies and contract fallovers.
BIS Oxford Economics has tipped price falls for units of 7 per cent between now and 2020 — 14 per cent in real terms. Latest figures from the Real Estate Institute of Queensland show an overall decline in the average price of apartments of 2.3 per cent in the June quarter.
Fly-in, fly-out worker Rebecca Tavo, 34, has just listed her onebedroom, one-bathroom, one-car unit in inner-city Teneriffe for sale on Gumtree, with hopes of a $450,000 sale. After owning the apartment for about eight years, the mine worker and elite sportswoman expects to get her money back and return to Western Australia.
“I don’t have any qualms I will sell it, it will just be at what price,” she said. “All I know is everyone wants to be there (Teneriffe). All the young people, they all want to be around that area.”
Apartment developers are throwing in furniture packages, discounts and rental guarantees to secure sales, with a backlog of more than 2200 units — about two years of supply — still awaiting to be sold in some projects.
Marketers for The Marc Apartments in inner-city Kangaroo Point are knocking $5000 off the price as well as offering $15,000 furniture packages, free blinds and a one-year rental guarantee on two-bedroom units for buyers who sign up before the end of the month.
PPB Advisory head of real estate Garry McLean said this quarter would determine how the market was likely to fare.
“We are hearing mostly positive stories,” he said. “Most of the settlements that have occurred have gone reasonable well, though it is certainly slower in the tail end.”
He said the “massive surge” in supply followed a long period after the global financial crisis when little was built.
“I would expect there to be some price reduction but, again, we are seeing the rental market holding well and we’re not seeing significant unoccupied apartments coming through,” he said.
Rebecca Tavo outside her Teneriffe apartment