Brisbane’s apartment market has been steadily declining since 2016,
however as supply and demand balance out, the inner Brisbane’s apartment market is expected to stabilise this year and into 2020.
While development conditions remain challenging, JLL’s 1Q 2019 Apartment Market Brisbane Report expects supply to remain restrained for many years.
“Further declines in supply levels over 2019 help position Brisbane to recover strongly over the medium-term,” the report notes.
Brisbane offers strong foundations explains JLL’s head of research Leigh Warner, who anticipates underlying demand will continue to be supported by population growth, particularly interstate migration.
“Increased jobs growth and infrastructure spending are expected to continue to support this growth cycle,” Warner said. “As the market rebalances, supply levels will continue to contract over the next 12-24 months. Prices are expected to steadily improve and stabilise into 2020.”
Apartment supply forecasts this year are estimated at 40 per cent below 2018, and less than half of the 2016 peak which saw the market in oversupply.
Approximately 31 projects comprising 5700 apartments are under construction right now across inner Brisbane, with the inner south (28 per cent) and inner north (39 per cent) districts home to the majority of construction.
There are nine projects in Brisbane with 1100 apartments being marketed. JLL notes that a number of developments stopped marketing last year, and may re-launch at a later date.
The first quarter of 2019 saw no projects being completed, but 7 projects are expected to be finished in the second quarter, including Billbergia’s Brisbane Skytower at 222 Margaret Street.
Despite sluggish sales and restricted lending conditions, 2 projects started construction in the first quarter, including Aria’s 261-unit development, The Standard.
Brisbane’s inner city apartment approvals have declined by 49.3 per cent for the year to February 2019, as projects continue to be delayed given current market conditions.
JLL states a total of 2,181 apartments were approved over this period, with most concentrated in Fortitude Valley (23 per cent), South Brisbane (17 per cent) and West End (14 per cent).
“Further declines in supply levels over 2019 will help position Brisbane recover strongly over the medium-term. Nevertheless, tight credit conditions will continue to see commencements suppressed. “This has likely exacerbated the decline in completed apartments.” JLL expects apartment completions in 2020 to remain much the same in 2019.
“However the number of completions beyond this is very uncertain considering the current difficult pre-sale environment.”
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