Overall the Brisbane residential property market continues along my predicted path. Price growth continues in line with inflation. Median prices remain well below those of Sydney and Melbourne. The recent cut in interest rates by the Reserve Bank will also assist. This has resulted in property investors turning their sights to Brisbane for its higher rental returns and greater prospects for capital growth.
New project starts, particularly for larger apartment projects, are decreasing. The number of development sites presently up for sale has substantially increased. I recently performed a count of the approved sites for sale which passed over my desk in a 24 hour period. I looked at each site and counted the number of approved dwellings i.e. if the site had approval for 40 apartments, I added 40 to the tally. The total number was 1010. As I am not in that market, there inevitably will be many more.
This indicates to me there will be a significant slowdown in the delivery of new dwellings due primarily to financing restrictions. The market appears to be balancing itself to avoid major oversupply issues. My expectation is that in 12 months we will be saying “where have all the cranes gone?”
The best description, although a bit graphic, that I have heard is that it is all like a chicken passing through a carpet snake.
Brisbane will not be immune to oversupply issues. My view is that it will be restricted to some specific areas and product types. A repeat GPS borrower recently put on hold and re-tenanted the existing dwellings for a proposed development in one of these areas. It was a mutual decision by the developer and GPS, as we are both averse to risk. The area in question will come good in time.
Sales of completed product to non-Australian residents in GPS funded projects remain low. The major factor is that GPS funds smaller developments which do not have the marketing budgets of larger projects, and so cannot generate the necessary traction overseas. Sales of product funded by GPS continues to be largely to Australian domiciled investors and owner occupiers. A large contributor to this is their preference for smaller complexes.
In summary, market conditions remain sound for GPS and its investors. As always, we are a referrals based business. If you like our service, then please refer us to your friends, family and colleagues.