This article is from the Australian Property Journal archive
WHILE Brisbane’s inner city apartment oversupply has prompted a halt in new developments, the inner areas, major city nodes and some growth spots remain oversupplied heading into the second half of 2018.
According to LMW’s Residential Market Indicator for June, trends in Brisbane show a clear oversupply of units in inner city areas and around the major centre nodes such as Chermside, Indooroopilly, Upper Mt Gravatt and Nundah, as well as expanding locations on transport corridors such as Mitchelton and Everton Park.
“These nodes have been targeted heavily by developers with increased densities allowing a concentration of buildings in these areas. The oversupply trend will continue in these areas for the foreseeable future, with the only shining light being a clear shift from developers to stop new developments coming out of the ground.
“It will however take some time for existing stock and stock currently under construction to flush out before we enter an improving market for the standard investment unit.”
Better trends are being in seen lower-density areas with less competition, namely Carina’s townhouses on the bayside with a similar product are much healthier than the investment unit market. The bayside region hasn’t seen any real influx of product and is not in an oversupply situation.
LMW said apartment and townhouse oversupply in Melbourne is being seen throughout central Melbourne, inner western suburbs such as Footscray and Yarraville, and across to the inner north through Essendon, Glenroy and Fawkner, and in the east and south-eastern suburbs of Doncaster, Dandenong and Mordialloc.
“The areas to the north suffering from over-supply concerns are mainly due to the supply of townhouses being constructed through Glenroy and Fawkner,” it said.
“The same applies with the apartment towers being built through the western suburbs such as Footscray and Essendon where there has been a sustained growth in construction of mid-level grade apartment complexes,”
Good townhouses remain in demand and support supply through Brighton, Bentleigh and Caulfield, while low price points and first home buyers are driving strong demand through the outer west and outer east show unit markets.
Overall, apartment supply is “mostly constricted” and general trends indicate softening market conditions across most sectors, which is expected to continue in line with the downward shift in the wider market.
Sydney’s market is proving increasingly lumpy. A drop in demand from local and offshore investors for units has come with tightening credit conditions and an overall softening in the market, while delivery reaches a peak following the recent construction boom.
Worst-affected areas include Parramatta, Sydney Olympic Park and Green Square, which were already experiencing oversupply. Other centres such as the Botany and Mascot precinct, Blacktown, Epping, Chatswood and Macquarie Park and now also feeling the pinch.
LMW said valuers are seeing increased disparity between off-the-plan contract prices and resale values for completed stock, which increases concerns going forward regarding settlement risk as more completions continue to hit the market.
“Cash rebates and other incentives have well and truly returned as developers try to offload their residual stock, which is something Sydney has not seen at these levels for some years.
“In other peripheral suburbs, good quality units within smaller established low rise developments or those that are targeted at lifestyle buyers and downsizers, are holding up better than most. The negative trend in these areas reflects the impact of Sydney’s softening market conditions generally and we expect the deterioration to be shorter lived.
“Overall, we are seeing a clear trend towards apartments over detached housing given better affordability and connectivity etc., but expect this segment broadly (particularly for new and off the plan apartments) to continue softening for the foreseeable future as the market struggles to keep up with supply.”
Australian Property Journal
