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Apartment supply push Brisbane vacancies higher

Posted on 17 May 2017

Source: Australian Property Journal

MEDIUM and high density apartments supply in inner city Brisbane are beginning to outstrip demand, with vacancies having reached 4.4% almost at a decade high.

REIQ data show regional Queensland recorded strong vacancy improvement over the March quarter, however the strong level of apartment supply within 5kms of the Brisbane CBD over the past 18 months has pushed vacancy rates up from 3.6% in December quarter to 4.4% in March, which is significantly higher than the 2.5% recorded in March 2016.

Vacancy rates within 5km of the CBD is at a decade high, exceeding the previous high of 4.1% recorded in December 2013 the only other time in the past 10 years where rates were above 4%.

"What we're seeing now is the normal cyclical nature of property demand builds to a point where pressure triggers the increase of supply," REIQ chief executive officer Antonia Mercorella said.

"Then supply starts to build and keeps going until we see that that demand has been met. Typically, supply will briefly outstrip demand before easing back and then demand will start to build again and so the cycle goes.

"We are entering a period of great buying opportunities with bargains to be had in the inner city before demand builds again and puts pressure on prices and rents," she said.

"The 2016 Census revealed that Queensland has moved from about 30% of our population renting to about 50% now renting and we can conclude that rental accommodation will always be in demand," Mercorella said. "This is the point of the cycle where savvy buyers snap up good buying opportunities."

Elsewhere in Brisbane LGA vacancy rates tightened. In the 5-20km ring, vacancies tightened from 3.3% to 3.1%.

Vacancies tightened in Greater Brisbane growth corridors of Ipswich, Logan and Moreton Bay, indicating continued growing demand for rental accommodation.

Mercorella said the good news story to come out of this data release is improving conditions in regional Queensland.

"Improving key economic indicators, including the stronger price of coking coal, and the lower Aussie dollar boosting tourism numbers, are clearly giving regional Queenslanders cause for optimism.

"The housing market in regional Queensland is closely tied to these two industries and we can see that workers are being attracted back to these cities with the tightening of vacancy rate figures," she added.

Gladstone led the way in the March quarter, falling 3.5% to 6.4%, its lowest vacancy rate since June quarter 2015.

Mackay similarly fell by 1.5pp from 7.9% to 6.4%, its lowest level since September 2013. Townsville declined by 0.2pp to 6.2%, its lowest vacancy rate since March 2016. Toowoomba was steady, moving slightly to 2.9% and deemed to be just outside the healthy range. Rockhampton and Bundaberg returned surprise numbers in the quarter, increasing between 0.8pp and 4.3pp in both markets.

Mercorella said the southeast corner remains the powerhouse of the Queensland housing market with vacancies remaining tight in both the Sunshine and Gold coasts.

Pine Rivers at Moreton Bay is the tightest rental market in Queensland, at 1.3%.

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