The latest unit price results from CoreLogic revealed that Brisbane’s unit values continue to languish, down some 13% below their March 2008 peak:
Domain also revealed that Brisbane unit rents have experienced zero nominal growth in more than five years (i.e. since December 2012):
Little wonder then that The ABC in February reported that Brisbane apartment owners were hemorrhaging losses as prices plumbed 4-year lows.
And today, The ABC has repeated the dose, reporting that Brisbane’s apartment glut has prompted “massive” discounting:
SQM Research managing director Louis Christopher said large price falls have become the new norm for Brisbane apartment owners looking to sell in a saturated market.
“We have seen some heavy discounting before, but this is probably one of the biggest ones I’ve ever actually seen,” he said.
“It’s fair to say this is not normal in the market. Nevertheless, there has been an oversupply of properties — we see it through the rental market in the Brisbane CBD where we are recording rental vacancy rates of 5 per cent…
Mr Christopher said property oversupply was a problem mostly localised to Brisbane, with surrounding Queensland regions and other states recording much tighter vacancy rates…
“When I look at the three main capital cities — Melbourne, Sydney and Brisbane — Brisbane has suffered the most in terms of an oversupply of units.
“Brisbane’s population growth rate has been falling behind Sydney and Melbourne and because of that, it hasn’t been able to absorb the surplus stock that’s been built, hence the reason why we’ve seen higher vacancy rates compared to Melbourne and Sydney.”
The reason for the sluggish growth in both Brisbane unit prices and rents is largely due to the large oversupply that has developed, especially in the apartment space:
Back in October, CoreLogic noted that Brisbane is facing the biggest uplift in apartment supply over the next two years:
With the inner-city facing a veritable deluge of new stock:
And rental vacancies already highly elevated in these areas:
So, these factors help to explain the falling apartments prices, rising vacancies, stagnant rents, and heavy discounting taking place.
One upside is that population growth into Brisbane is now rising as dwelling construction is falling, which suggests the market could soon turn the corner.
At least once we pass the mortgage credit crunch and negative gearing reform!
