This article is from the Australian Property Journal archive
APARTMENT sales within inner Brisbane have stabilised, according to Colliers International.
The Colliers International Brisbane Apartment Research and Forecast Report – Q1 2011 found investor demand remained a key driver of the market, particularly for price-pointed, affordable stock generating strong rental income.
However, despite record supply rise in Q1 of 2011, possible interest rates rises and increasing vacancy in the medium term may impact the market and have a notable effect on investor activity.
Report author and Colliers research senior analyst research Josh Daly said in the year to Q1 2011 there were just under 1,400 transactions of new apartments in inner Brisbane, a slight decline from the 12-month period ending Q4 2010.
“On a quarterly basis, demand has been softening over the past six months, with just 205 transactions recorded in Q1 2011, which is down from the previous quarter, but in line with the five-year average of 220 sales,”
He said sales volumes in the inner North continued to exceed all other precincts, due in part to the larger supply of available apartments.
The precinct achieved 831 unconditional sales in the year to Q1 2011, representing 60% of the inner Brisbane total.
The inner South and CBD accounted for 16% and 15% respectively of the total.
Daly said there was considerable variation in the sales involving affordable and premium apartments.
In the year toQ1 2011, 85% of unconditional sales in the inner South involved apartments less than $650,000 in the price, followed by the inner North and CBD with 83% and 77%.
“In contrast, the proportion of unconditional sales in this price range was considerably lower in the inner East and inner West, with 19% and 56% respectively,” he added.
The report found that in terms of supply, the number of new apartments available for sale has been rising consistently since mid 2008, with the expected release of a substantial volume of apartments over the next year to put the current market imbalance under further pressure.
“While current market conditions are likely to inhibit substantial capital growth for some time, investor demand will persist if target rates of return can be achieved. In the near term, returns will be driven primarily by rental income.
“Although the inner Brisbane vacancy rate is currently only 3.1%, there is a substantial volume of investor stock completing in the short term which is expected to have a notable impact on vacancy and limit the potential for significant rental growth in many locations,” he continued. “Furthermore, there is a considerable amount of supply to be released for sale over the next 12 months,”
Daly said in the near term, the rental market would be supported to some extent by potential owner occupiers, who are delaying their purchasing decisions due to the uncertain interest rate outlook and expectations of flat prices in the foreseeable future.
According to the report, Q1 2011 was the second consecutive quarter in which sales volumes for new apartments declined, although when considered as a moving annual average, this represented a stabilisation.
The inner North precinct’s 1,268 apartments account for 50% of current supply, the CBD’s 711 28%, followed by the inner South with 255 for 10%.
Daly said the high levels of current supply in inner Brisbane are largely attributable to exceptional growth in the inner North over the past three years.
“The precinct has grown strongly due to solid demand for apartments and the ability of developers to acquire good sites and construct viable apartment buildings,” he said.
The inner North and inner South are set to see a substantial number of apartments released for sale over the next 12 months, with 2,360 and 989 apartments respectively, whilst other precincts will see more moderate volumes.
Colliers residential director Sherrie Storor said there were a considerable number of medium to large projects being undertaken across the inner city, particularly in the inner northern suburbs of Hamilton, Fortitude Valley and Bowen Hills.
“We expect to continue to see one- and two-bedroom apartments selling well, particularly within the sub-$650,000 mark,” she said. “Investor demand is still strong and will continue to exist as long as there is rental demand. The current market really does present as an ideal opportunity for the local market to purchase before prices rise.”
The weighted average price of unconditional sales in inner Brisbane rose by 2% over Q1 2011, to $565,100.
Australian Property Journal
