APPD Market Report Article

Brisbane

August 26, 2022

Leigh Warner, Senior Director - Residential Research, Australia

6.5%

AUD 490

Rents
Rising

Brisbane apartment market sales tapers over 1Q22

  • Brisbane’s housing market continued a little longer than Sydney and Melbourne, in part due to strong interstate migration through the pandemic. However, sales volumes have also started to slow in Brisbane over the past few months since interest rates began to rise.
  • In the apartment pre-sales market, there has still been continued robust demand for quality boutique projects. Downsizer demand continues to drive this market, with many continuing to capitalise on very strong recent growth in the market to enter the apartment market.

New supply levels in Brisbane particularly low

  • The number of Inner Brisbane apartment completions was just over 1,000 in 2021, which compares to a peak of over 7,000 in 2016. While supply will rise somewhat in 2022, it will likely stay low as very few new projects are commencing in the current environment of high construction costs, keeping supply low for years yet.
  • Greater Brisbane rental vacancy has been tight for some time, but fell further to just 0.6% in June (SQM Research). Vacancy in the Brisbane CBD is now just 1.3%, compared to a post-COVID peak of 14% in 2020. With little new supply to alleviate the situation, conditions are unlikely to ease any time soon.

Rental growth continues to build

  • Brisbane unit prices have bucked the general price growth slowdown since interest rates began to rise. Prices rose 0.7% in July to be 15.7% higher in annual terms. This likely reflects a combination of the lack of supply in the market and still comparatively affordable prices.
  • Strong rental growth has been occurring for some time in Brisbane and rents are now well above pre-COVID levels. Apartment gross rental yields in Brisbane remain around 5% and are attractive to investors relative to Sydney and Melbourne.

Outlook: No supply relief for some time to come

  • While the general housing market environment is one of slowing growth, the Brisbane apartment market is expected to remain relatively resilient due to the clear imbalance between robust underlying demand and very limited new supply.
  • With low supply, there seems to be no relief in sight for tight rental market conditions. Rents will continue to grow strongly and the only constraint for landlords in achieving rental growth will likely be wage growth and what tenants can feasibly afford to pay.

Note: Brisbane Residential refers to Inner Brisbane apartments. Pricing data sourced from CoreLogic. Vacancy data sourced from REIQ. Rental data sourced from The Queensland Rental Tenancy Authority.

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