Brisbane’s West End can expect apartment price growth in 2017-18 due to reduced supply combined with strong demand and a $10 billion Brisbane infrastructure pipeline.
A June 2017 report from renowned property and planning consultancy, URBIS, states that West End’s apartment market has experienced a significant slowdown in construction while sales and rental demand remains strong – particularly for new developments.
Artist’s impression of Montague Markets.
From a leasing perspective, the report cites demand for West End rental apartments as being 71 per quarter over the last 10 years, 105 per quarter over the past five years and a record 226 per quarter over the past 12 months.
The report also cites this as sufficient demand to meet the 1053 new units due for completion over the next 18 months, especially since renters are “showing a preference for new development over established, with quality a key factor”.
Consistent with this are figures from two modern West End developments analysed in the study – Light & Co Apartments and Riverside West End. They identified low vacancy rates of 2.6 and 2.9 per cent and healthy yields of 4.8 and 4.9 per cent respectively.
Also influencing URBIS’ projections for apartment price growth in West End is the significant price differential between the suburb’s median unit and house prices.
While West End’s housing market experienced strong growth averaging 9 per cent per annum for the five years from 2012 to 2017, the apartment market has remained flat.
This is reflected in the widening price differential: the 20-year average is 48 percent, the 10-year average 58 per cent and it now sits at 111 per cent.
“As supply levels of apartments begin to stabilise (with limited new apartment supply due to enter the market), the suburb’s median apartment price is expected to recover,” the report says.
It adds that the house price growth is evidence of a market with strong underlying values and the price differential is now expected to reduce.
In closure, the report states that West End’s apartment market “has demonstrated itself to be a long term player, delivering an uplift in median values and favourable rental market conditions over time.”
Artist’s impression of Queens Wharf from South Bank.
The Boom of Brisbane
Also helping drive up to Brisbane and particularly West End’s apartment prices is the huge CBD infrastructure boom which will see $10 billion of major projects completed in 2022, according to Brisbane Lord Mayor Graham Quirk, speaking to the Brisbane Times.
Those developments include the Queens Wharf casino and entertainment complex, the Howard Smith Wharves redevelopment and the Brisbane Quarter on the site of the old Supreme Court building.
Brisbane is also benefitting from strong 2016-17 economic growth and future growth forecasts which are estimated to be higher than the national average, according to Deloitte Queensland managing partner, John Greig.
Feeding that is strong coal exports, a booming tourism market and new public transport initiatives, according to Greig.
Rising interstate migration – driven in part by Brisbane’s relative affordability of housing compared with Sydney and Melbourne is another factor, as is Brisbane having “what the world wants”.