According to a recent Colliers International Research and Forecast Report, new apartment sales are starting to pick up in both Brisbane and on the Gold Coast.
Brisbane had its strongest March quarter in nearly a decade and the Gold Coast had its first increase in sales in a year, up by 49 per cent on last year’s figures.
The report said Brisbane had 365 new apartment sales across 47 projects, which was worth $208 million, and the Gold Coast had a record 23 high-rise sales in Broadbeach and 46 low-rise sales in the March quarter.
Consecutive interest rate changes and certain stimulus measures both appear to have had a positive impact on new apartment property investment.
Rental growth for one-bedroom units climbed 8 percent in Brisbane and 20 per cent for two bedroom units, and there were 55 recorded sales of CBD apartments.
The report indicates the results are encouraging and that the 50 basis point reduction to the cash rate announced recently by the Reserve Bank will result in a general lift in investor confidence.
If confidence continues to lift however, the limited supply of affordable properties on the Gold Coast will lead to supply shortages, particularly in the low-rise sector, with the supply of new apartments being exhausted in less than three years.
According to the report, the number of new apartment projects on the Gold and Tweed Coasts has almost halved in the last three years. Supply has also declined in Brisbane, with the number of apartments down by 12 per cent.
It is believed that developers on the Gold Coast have been using the last few years to progress their approvals through council and that, once market conditions improve, many of these planned projects will go ahead. In the meantime, however, there is likely to be an undersupply of affordable new apartments on the Gold Coast.
The report noted that the Brisbane housing market was starting to benefit from the mining boom in central and northern Queensland, up by 1.2 per cent in the March quarter, but both the Gold Coast and Sunshine Coast were not seeing much benefit from the boom and were continuing to struggle. House prices were down 5.1 per cent on the Gold Coast.
While there is a looming shortage of affordable investment property on the Gold Coast, there is also an oversupply of prestige apartments and a lack of active buyers in this sector. This is due to low buyer confidence and is expected to continue trending downwards. While some prestige complexes have seen a reduction in asking prices, the problem of oversupply is expected to hamper recovery in this sector in the short to medium term.
While the March quarter results do show signs of improvement and the report would seem to indicate a small lift in investor confidence, the overall outlook still appears to be patchy.
Those areas not exposed to the benefits of the resource sector boom such as the Gold Coast and Sunshine Coast are continuing to struggle, while areas such as the Isaac region are experiencing record growth, with the average house price at around $578,500, which is $79,500 higher than Brisbane.