ARE WE BUILDING AN APARTMENT BUBBLE?

Written on the 29 January 2015 by Laura Daquino

ARE WE BUILDING AN APARTMENT BUBBLE? NEW data lends itself to the notion that Brisbane's property market is headed for oversupply on the apartment front.

Domain Group's recent House Price Report revealed a revival in Brisbane house price growth over the December quarter, up 1.5 per cent from the previous period, but a sharp fall of 4.2 per cent in unit prices for the same period.

On this measure, Brisbane was the second worst performing city for the period after Hobart, which recorded a 7.9 per cent drop in unit prices.

Andrew Wilson, senior economist for the Domain Group, says development particularly in suburban areas is having an impact on the supply-demand ratio for units.

"It certainly was the worst result for Brisbane over the year," says Wilson.

"But it isn't a surprise because we have seen a lot of new units being built, which will have an impact on moving supply ahead of demand.

"We have also been tracking falling rents in areas that do have high apartment numbers and this is now being correlated with falling prices."

Wilson says the brownfield nature of Brisbane has given rise to this situation, and likens it to what has occurred in markets such as Melbourne and the Gold Coast.

"We see supply moving ahead of demand traditionally in new high rise apartment markets located in brownfield sites being redeveloped, even though over the medium term there will be growing demand for inner-city living and apartments in Brisbane," he says.

"We have seen demand gradually catch up with supply in markets like Melbourne and the Gold Coast, and it really is just the nature of the beast given construction timelines."

Wilson says Brisbane's housing market is in "catch up mode", following Sydney to rank as the nation's second strongest.

Despite recording falls over the September quarter, all together the year measured to deliver Brisbane's best annual result for house prices since 2009.

"This largely reflects the fact that Brisbane was behind the game and slow to start growing when interest rates started to impact the housing market, now it's in catch up mode with more confidence around," says Wilson.

"A lot of the activity is in the middle to upper price level though, with outer suburban markets such as Ipswich, Logan and Moreton Bay still underperforming in comparison."





Author: Laura Daquino Connect via: Twitter LinkedIn

Latest News

DARK DAYS AHEAD FOR AUSTRALIAN RETAIL AS REPORT FORECASTS MAJOR INDUSTRY ROUT

ALMOST 1,600 retail businesses are at risk of imminent collapse, including 21 major retailers with turnovers of more ...

GOODMAN TAKES PROFIT AND REVENUE DECLINE BUT LOOKS TO CASH IN ON AMAZON'S ARRIVAL

Commercial and industrial property group Goodman (ASX: GMG) has reported underlying full year net profit has dropped ...

ARIADNE CUTS DEMANDS FOR FOUR ARDENT BOARD SEATS TO TWO AHEAD OF EGM

REBEL shareholders have reduced their demands on embattled theme parks operator Ardent Leisure (ASX: AAD) to give the...

VITA GROUP POSTS STEADY RESULTS DESPITE ROUGH YEAR

IT'S no secret Vita Group (ASX: VTG) has had a testing year, however the company has still managed to deliver ...

Related News

DARK DAYS AHEAD FOR AUSTRALIAN RETAIL AS REPORT FORECASTS MAJOR INDUSTRY ROUT

ALMOST 1,600 retail businesses are at risk of imminent collapse, including 21 major retailers with turnovers of more ...

WESFARMERS BOOKS BUMPER PROFIT BUT SUPERMARKET WAR HITS COLES' BOTTOM LINE

SUPERMARKET giant Coles has posted its biggest slide in earnings since it was acquired by Wesfarmers (ASX: WES) 10 ye...

ANALYSTS PREDICT WHAT AUSSIE LIVING IS LIKELY TO BECOME IN THE NEXT CENTURY

AS THE Australian population continues to grow, analysts are predicting what the country is likely to look like wi...

SEVEN WEST REPORTS MASSIVE LOSS AND CUTS CEO TIM WORNER'S PAY PACKET BY $450K

SEVEN West Media (ASX: SWM) has posted a full-year loss of $744.3 million and cut CEO Tim Worner's pay packet by ...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter