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Friday, 3 May 2019

Brisbane oversupply risk fades some more

Units filling up

Brisbane's apartment construction boom has deservedly garnered a lot of press in recent years, but approvals and commencements have continued to slow.

And, just as importantly, the population is moving into south-east Queensland.

In New Farm and Teneriffe, vacancy rates are at the lowest level since 2012 at 1½ per cent (not that these suburbs were ever high risk).


Source: SQM Research

Even in West End and South Brisbane, where construction had been hammering along, oversupply risks have faded. 


Source: SQM Research

Likewise in Hamilton, which has been revitalised down by the river front in recent times.


Source: SQM Research

And in ground zero for apartment supply, Newstead, vacancy rates have fallen back to 3.8 per cent from sky-high levels.

Without being unkind, some of the new units here would be tough yakka to rent out at any price, though there is a mixture of higher quality stock in Newstead too.


Source: SQM Research

Vacancy rates have also come down from very high levels in the Brisbane CBD itself, though there have been significant settlement valuation issues in one of the high-profile developments there. 

The wrap

Overall, Brisbane's apartment construction boom has long since slowed after peaking in 2016.

And fortunately the city has been a big enough drawcard for internal migrants that vacancy rates have been falling for quite some time now. 

Suburban houses have delivered excellent returns in many parts of Brisbane over a long period of time, though naturally such a level of nuance is lost on a lot of interstate experts.