The Black Hole in Brisbane's Property Market

The Black Hole in Brisbane's Property Market

More than one in four new apartments completed in the Brisbane CBD since 2016 remain unsold, according to a new report by valuation firm m3property.

The report, which seeks to quantify the level of oversupply and price-discounting in the Brisbane apartment market since it peaked four years ago, has found that a total of 1,500 apartments remain unsold across the inner city, or just a little more than 10% of completed stock within 5 kilometres of the CBD.

This is up from 8.1% in December 2018 and 8.9% in July last year.

The proportion of unsold stock was more than double in the CBD at 25.6%, where last year the city's tallest high-rise, Brisbane Skytower, with more than 1,100 apartments topped out at 222 Margaret Street.

According to m3property, buyers within 5 kilometres of the CBD copped a 3% loss on average when they resold their new units.

The average loss was substantially higher at 7.4% in Brisbane's inner north, which includes Fortitude Valley, Bowen Hills and Newstead, suburbs that have been swamped with new apartment developments in recent years.

However, despite the CBD having a 25.6% unsold rate, buyers made an average capital gain of 7.6% because of the higher proportion of luxury apartments.

Capital Growth

"We found it was common for units in the CBD and higher quality/prestige developments to experience positive capital growth," said m3property research director Casey Robinson.

The valuation firm predicted that the unsold rate would decline over the next six months as sales activity strengthened and new supply completions remained relatively subdued.

In its analysis, m3property said the Brisbane apartment market had peaked in 2016 when more stringent lending and borrowing requirements were introduced and buyer demand declined.

"Units that were resold during 2016 and 2017 showed positive capital growth on average, whereas units that were resold in 2018 and 2019 experienced an overall decline in average values," Ms Robinson said.

At the 90-storey Brisbane Skytower developed by Billbergia and AMP Capital, off-the-plan buyers have been hit by bank valuation declines of as much as 25% at settlement.

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