I’m a little worried about the Brisbane property market.
Now that’s probably not something you expected to hear from me, especially since I’ve added some significant properties to my Brisbane portfolio over the last few years and my team buy more properties for clients in Brisbane than any other buyers agency, but the truth is….I’m a little worried.
Now…I’ve seen this before – the signs of overbuilding – the usual exuberance from property developers.
You just have to open Saturday’s paper to see the huge number of new development projects coming out of the ground – and there are even more on the drawing board.
Driven by recent strong investor demand, Brisbane is set to be hit by a wave of new apartments in the coming years.
Here are the highlights of this report:
- Currently 19,800 apartments are either under construction or being marketed within the inner city precincts of Brisbane.
This new supply is expected to be completed over the 2015-2017 period.
- A further 19,700 apartments are currently proposed or in the early planning stages within the inner city precincts of Brisbane.
- The Brisbane apartment market has continued to flourish on the back of strong investor demand from both interstate and foreign investors.
- Due to its value proposition and higher yields, Brisbane will continue to experience steady demand for residential product across all the inner city precincts.
- JLL expects the investor market to moderate over the next 12-18 months, as large numbers of new apartments enter the rental market during 2016-2017.
- As a result rental growth will slow and yields may continue to fall, especially for the generic ‘investor type’ stock.
- The strong supply pipeline is also expected to limit the pace of capital growth in the apartment market out to 2017.
- However, opportunities will be available to those willing to service the high-end, owner occupier demand.
SO WHY AM I WORRIED?
One factor is the oversupply of properties that is looming, and that’s why I’d be very very careful to avoid buying properties in or close to the CBD.
The looming significant oversupply will mean minimal capital growth and rental growth for properties in and surrounding the CBD.
Another issue is the standard of some of these buildings, and at street level, we could have a situation where there is insufficient open space, wind tunnels and overshadowing effects.
DOES THIS MEAN WE SHOULD AVOID THE BRISBANE PROPERTY MARKET?
Well first of all there is not one Brisbane property market – there are different markets based on geography, price points and type of property.
And as I explained I have not been avoiding investing in the Brisbane property market, I’ve been investing in selected segments of the Brisbane property market.
In particular we’re buying houses in affluent, gentrifying, middle ring suburbs.
And townhouses and established apartments in the right suburbs.
And we love buying properties to which we can add value. In that way we do the heavy lifting rather than wait for the market to do it.
THIS IS A VERY DIFFERENT MARKET TO THE INNER-CITY HIGH-RISE APARTMENT MARKET
If you’re not sure what or where to buy and you’re looking for independent property investment advice to help you become financially independent, no one can help you quite like the independent property investment strategists at Metropole.
We’ll help you cut through the clutter of mixed property messages.
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