Boots on the ground
I've been watching the Brisbane market closely this year, though I don't always post that much on my blog page about it. Here are six ways in which the inner Brisbane apartment market is steadily adjusting.
1 - Mothballing
Developers of apartment projects have found it increasingly tough to shift the last few units in their developments, even with discounting and particularly now foreign buyers have pulled back. This is a common story heard from local market participants.
Apartment approvals in Brisbane have dropped off a cliff, while many owners of development sites will now opt to sit on them until the next cycle, or some are selling their sites to cut their losses.
It's clear from wandering around the 'hood that some long marketed projects have not seen a sod turned, suggesting that unsurprisingly pre-sales have been struggling along (e.g. in the 'Gabba).
2 - Construction slowdown
We had a bit of divine intervention in the first quarter of the year, with Queensland apartment building work done dropping by 22 per cent, largely due to severe weather.
Cyclone activity aside, generally construction does now seem to be progressing with less urgency, and the cyclical peak in activity has now passed.
3 - Staged releases
The big listed developers are releasing their major projects in stages, and some may well be nudged out or held back a little until the market is ready to play ball at acceptable margins.
4 - Renters centralising
You'll probably have to use your zoom function to be able to see this, but some of the established apartment towers now have furniture on nearly every balcony (which demonstrably wasn't the case in 2016, as indeed I showed on this blog).
This dynamic is pulling rental demand away from some of the older and tired rental housing in middle ring suburbs, in turn encouraging the older stock be renovated or removed.
This is not universally the case, however, and some of the larger or newly completed projects clearly have many vacant units yet to be absorbed.
Falling prices, you say? Yes, there's been a fair bit of that, both for market sales and rental prices.
The weakening rental market isn't always picked up perfectly in the data. For example, sometimes landlords would rather offer a free month of rent, electronic products, their mother-in-law...pretty much anything to avoid dropping the headline weekly rental amount.
But, the signs are there. You only need to look at the banners on the buildings to see that there umpteeen vacant apartments still to be filled. It's a bona fide renter's market out there, folks.
6 - Immigration
Finally, one thing that the developers anticipated correctly is accelerating immigration from interstate.
In fact, Brisbane is now attracting more internal migrants than any other capital city, and young professionals will gravitate to the inner city locales, drawn in by the prospect of a rental market bargain combined with walkability.
The adjustment is far from finished yet, granted, but it does not appear to be the case that there is an oversupply that can be measured in years, as some have claimed.
Apartment approvals and commencements have dropped dramatically, while Greater Brisbane's population growth accelerated to 1.8 per cent in FY2016, in doing so surging to 41,135 from 35,090 just a year earlier.
Population growth across the greater capital city will be faster again in 2017, probably at approaching 45,000 by my projections.
So, a weak market, but a gradually adjusting one.