Apartment oversupply still plaguing Brisbane

Adam Smith 19 January 2017

crane apartment constructionThe gap between apartment and house prices in Brisbane is set to widen.

A research report by Momentum Wealth has forecast that an oversupply of apartments in Brisbane will see the gulf between apartment prices and house prices widen in the year ahead. The report said housing supply in the city remained around normal levels, while apartment approvals were considerably higher than their 10-year average.

“We’re likely to see a greater divergence between the performance of houses and apartments, given these supply-side fundamentals,” Momentum Wealth managing director Damian Collins said.

Collins said an influx of apartment supply would weigh on capital growth and rental returns, especially in areas of the city with a high concentration of new stock.

Weak year ahead for apartments

“However, the research report shows that the number of houses under construction is in line with the 10-year average, meaning this segment will not reach a state of oversupply at current rates, which will help to buoy prices,” he said.

The report highlighted areas such as South Brisbane, Brisbane City, Newstead-Bowen Hills, West End and Chermside as areas for investors to avoid. Collins said these areas had high levels of new supply “waiting in the pipeline”.

“While we don’t expect all of these new apartment projects to go ahead, there will still be a considerable amount of new apartment supply coming to market in Brisbane over the next few years,” he said.

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