Tough times are a thing of the past for the Brisbane apartment market as construction approvals increase and investors return, according to Roger Carr, Sales Leader of the Bulimba Avnu Centre.
Although affected by the over-eagerness of developers, Brisbane fares better than the issue-ridden Sydney. Sydney suffers from loose construction quality control, often producing buildings with problems such as cracks, like Mascot Towers, and internal water leaks. On the other hand, there are significant, more stringent third party approval inspection processes at different stages existing in Brisbane than in Sydney.
Roger believes that Brisbane has already begun its rebound, let alone be poised to recover. This is how he sees the timeline of Brisbane’s apartment market fortunes:
2000-2017 – Construction frenzy
Since the turn of the century, high-rise construction has been booming in Australia. In 2000, there were roughly 900,000 occupied apartments (excluding townhouses) on census night. On the night of the 2016 census, there were 1,214,372 apartments out of nearly 10 million dwellings overall. Brisbane was no exception to this, as domestic and foreign investors added their brands to the skyline, and the population slowly became more closely-packed. This continued until 2013, when apartment development approvals outnumbered house approvals three-to-one in the sunshine state capital. Late in this period creating a unit oversupply, as occurred in other capital cities, lowering the value of apartments in general.
2017 – 2018 – APRA trying to make homes more affordable
APRA instructs the banking sector to tighten up investment lending criteria. Lending criteria was tightened, investment buyers found it more difficult to access the finances needed to purchase property. Finance for Foreign investors was also put under the microscope, the delicate balance between supply and demand was tipped again.
2018 – 2019 – The Banks Buckle down
The Banking Royal Commission findings were starting to unfold. The Big 4 banks were roundly scolded, and they reacted. Lending criteria was again tightened, buyers found it even more difficult to access the finances needed to purchase property. Something had to give, APRA starts to relax lending restrictions mid 2019.
2018-2019 – A halt to the rush
The double banking hit tightened investment lending – far too many apartments were coming out of the ground for not enough buyers – Brisbane, many property developers made a crucial decision to change. Roger believes that the credit for easing off lies, not with Council, but with the project developers themselves. This was the crucial step that occurred in Brisbane, but did not happen in Sydney: recognising that the market was over saturated, developers slowed down building new high-rises dramatically and postponed many projects until demand conditions improved. Supply ratios evened back out, giving the apartment market the space it needed for values to strengthen again.
2018 -2019 – A new apartment market emerges
The Baby Boomers are downsizing from their large family homes and now looking ahead to lifestyle. Well positioned, convenient high end apartments/penthouses are now on their cashed upped radars. Well appointed, generous in proportion, low maintenance and perfect for the lock up and travel lifestyle. This is now becoming a new apartment marketplace.
Today – Back to BAU
Today, the fallout of the Royal Commission is fading. The banks are loosening up borrowing criteria for owner occupiers and investors, the recent interest rate cuts are allowing more people to buy into the property market.
Politically, the landscape is changing for the better as well. Pre-election, a campaign promise from Labour was to tighten restrictions on negative gearing, creating an environment where potential property investors were not committing to joining the market. When the Coalition was elected, the opposite happened, resulting confidence flooding back into the market from investors and home buyers alike.
Buyer confidence and open home inspection numbers are on the rise, Brisbane has entered into its next property growth cycle. By 2020, experts like Roger predict that the over-saturation balance will have corrected itself, more sustainable construction levels will be back underway, allowing solid apartment price growth in the Brisbane market.
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