APPD Market Report Article

Brisbane

February 28, 2022

6.4%

AUD 500

Rents
Rising

The local luxury and downsizing market is strong

  • Strong net interstate migration is boosting demand and local downsizing demand has also been strong for a while. While investor activity remains more subdued, it is increasing and the investment case for Brisbane is strong.
  • Quarterly sales volumes have increased 62% in 3Q21, relative to 3Q20 (CoreLogic). Similarly, unit transactions were up 68% over the year to 3Q21.

New apartment supply is low and staying low

  • Inner Brisbane apartment supply has fallen enormously since a 2016 peak of over 7,000 apartments, with just over 1,000 completed over 2021. Few new projects are still commencing and supply will stay very low for at least several more years.
  • Brisbane’s rental vacancy has tightened significantly since the onset of the pandemic to just over 1%. Inner-city apartment vacancy remains slightly higher, but has also been trending downwards.

The investment case for Brisbane is strong

  • While rental yields have fallen slightly over 2021 due to strong apartment price growth, the level of yields remains just under 5% and well above those in Sydney and Melbourne, which is attractive for investors as rental growth prospects also build.
  • Brisbane existing apartment prices continue to gain momentum, rising 4.2% over the three months to January 2022 to be 13.8% higher over the year (CoreLogic).

Outlook: Momentum likely to build quickly in 2022

  • The tailwinds behind Brisbane’s apartment market now appear strong and should see strong market conditions prevail in the next few years. Strong interstate migration has undoubtedly supported demand already, but population growth is expected to gain further momentum in 2022 now that international borders are open.
  • Increased demand will be met with low levels of new unit supply over the short term, which will likely see market balance tighten further over the medium term. Vacancy in the rental market is likely to fall further and rental growth is likely to intensify quickly.

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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