Brisbane apartment supply shortages worsen
Only 2,000 apartments are expected to be completed this year.
Apartment completions in Brisbane in 2023 are expected to rise to around 2,000 apartments. According to JLL, while this is double the level of the previous two years, it is still moderate relative to historical supply and underlying demand.
“Furthermore, it remains difficult to progress new projects and to even secure a builder, with building contractors focused on infrastructure projects for the 2032 Olympics.”
Here’s more from JLL:
Rental vacancy in Brisbane has been low for an extended period now, recording at 1.0% in September 2023. Vacancy stayed low across all product types and most parts of Brisbane, and market displacement levels remained high.
Population inflow supports demand
Underlying demand for Brisbane housing was underpinned by a return to very strong local population growth. Nevertheless, pre-sales demand for apartments was still mixed, and most focused towards downsizers looking for high-end boutique developments.
Investor demand for new apartments remained more subdued, albeit slowly improving. The level of offshore investors has been rising off a very low base, but this demand appeared to be concentrated on a narrow subset of projects.
Affordability the only constraint on rents
Brisbane 2-bed apartment asking rents have grown by around 45% from 2020 lows. The pace of growth was still strong, but has slowed in recent months. This slowing in growth reflected affordability tempering the market and changing demand patterns, as opposed to any supply alleviation.
Brisbane existing apartment prices have grown strongly over the past seven months and are now 5.1% higher over the year to September (CoreLogic). For off-the-plan sales, prices have grown strongly for higher quality stock that has been in high demand, but growth has been much more muted for mass market apartment stock.
Outlook: Recovery to gain pace
Apartment demand is likely to gain momentum over the next 12 months, underpinned by continued strong local population growth, the relative affordability of apartments, plus the likely steady return of investors to capitalise on the strong rental market conditions.
With supply levels likely to remain moderate for some time, Brisbane is expected to move further into under-supply, and this along with higher construction costs are likely to support robust medium-term apartment price growth. Stresses in the rental market are also likely to remain intense.
Note: Brisbane Residential refers to Inner Brisbane apartments. Pricing data sourced from CoreLogic. Vacancy data sourced from REIQ. Rental data sourced from JLL Valorem.