“So what does this mean for those who have just bought in Brisbane or is thinking about it right now?
In 1- 2 years there will be a huge UNDERSUPPLY of apartments in Brisbane causing upward pressure on property values equaling capital growth for astute investors.”
Quote provided by Shane Robson
High rise development has officially collapsed in Brisbane,
with new figures showing building approvals have plummeted 63 per cent this year.
Data obtained from the Australian Bureau of Statistics confirm what those in the industry have been predicting for months — a massive correction — as unit development grinds to a halt in an over-supplied market.
Overall, the number of Brisbane high rise building approvals are down by a staggering 3586 when compared with the same period last year.
Only 2109 high rises were approved in the five months to May this year — over the same period last year, there were 5695 approvals for new high rise buildings.
Unit approvals are down by as much as 100 per cent in some suburbs, such as Hamilton, East Brisbane, Coorparoo, Mount Gravatt and Norman Park.
The suburbs that were the busiest centres for unit development last year, Brisbane City, South Brisbane and West End, have been some of the hardest hit. Brisbane City high rise approvals fell from 1303 to 264 (80 per cent drop), South Brisbane’s from 1298 to 320 (75 per cent drop) and West End’s from 541 to 77 (86 per cent).
And the unit market is feeling the effect. Prices fell by 3.8 per cent last quarter — the biggest drop since 2000.
Domain Group chief economist Andrew Wilson describes the drop in approvals as “significant but not surprising”.
“These are big drops but this is the market correcting itself. There was an over-supply, here’s the correction … this is the way the market works. It’s the market stabilising itself,” he says.
Michael Matusik, of Matusik Property Insights, agrees.
“We kind of got ahead of ourselves and as a result the buyers and suppliers are saying ‘enough’s enough’,” Mr Matusik says.
“It’s over-consumption, we got indigestion and now this is just the market sorting itself out. In three to five years we’ll be eating together again.”
On a positive note, some suburbs have bucked the trend, pushing forward with more high rise approvals than ever. In Fortitude Valley, high rise approvals are up a whopping 1505 per cent on the same period as last year. In Bardon and Indooroopilly, approvals are up 317 per cent and 236 per cent respectively.
Mr Matusik says that while the cranes may disappear in the short term, they’ll be back in the medium term, making now a “great time” to buy an apartment in Brisbane.
“Generally the astute start to go ‘maybe I’ll look at an apartment but I’ll make very hard offers’,” Mr Matusik says. “There are some really good offers around because of the over-supply and the negativity surrounding the apartment space — but it’s still important to buy well.”
Mr Matusik recommends buying in smaller and/or staged developments, preferably no more than eight storeys, with limited chance of being built out, and with good local amenity.
Article provided by Domain.com.au ELLEN LUTTON