South-East Queensland Apartment demand

Date: 10 December 2009 |  Source : BIS Shrapnel

Independent research company BIS Shrapnel anticipates that supply of new apartments will collapse over the next couple of years to an annual average of just 650 new apartments while an average underlying demand of 1,600 new units exists. Given this shortfall in supply, BIS Shrapnel believes this is likely to underpin solid annual rental growth of 6.5% from now to 2010-11. They further predict that median price growth is to remain ‘moderate’ at 4.8% over the next year (not bad for ‘moderate’ growth – this suggests capital growth in excess of $30,000 before you’ve even settled). This capital growth is then anticipated to pick up, as stronger economic growth and confidence returns and rental yields continue to improve averaging 7.5% pa over the following three years to 2012-13 before slowing to under 5% in both 2013-14 and 2014-15.



As a result of continued growth in demand, and insufficient supply, BIS Shrapnel have forecast rental vacancy rates out to 2015 where they are actually negative in each of those years. Negative vacancy rates really just means pent-up demand. Between now and 2015 BIS Shrapnel further predicts median rentals will increase from $450 per week to $650 per week, an increase of $200 or 44%, over this period.



BIS Shrapnel is not alone in their predictions. Renowned south-east Queensland property market analyst Michael Matusik states:

“The number of new apartments currently for sale across inner Brisbane is the tightest in over a decade. At present at least, and again contrary to recent reports, we believe there is an inadequate supply of new apartments proposed across inner Brisbane. This is especially the case…across the city’s inner northern suburbs.”



In his April 2009 Snapshot entitled Now is the time to buy, Matusik comments further:



“Buying off-the-plan is particularly attractive at present, given the low interest rates and the time to settle. Between buying now and settlement, end prices and weekly rents should rise – and in some cases considerably.”