Demand to build slowly

• Despite strong fundamentals and very strong local population growth, new apartment demand remains relatively muted in Brisbane. Investor and first homebuyer demand were still constrained by credit conditions, while foreign demand remained limited. However, like other markets, demand from downsizers for quality boutique projects remained robust.
• Nevertheless, strong population growth continued to underpin strong underlying demand growth in Brisbane. Queensland’s population grew by 2.6% over the year to June 2023, and relative to other states this was the result of a mix of both overseas and interstate migration. Brisbane’s population growth is likely to remain elevated right through to the 2032 Brisbane Olympics.

Under-supply grows

• Brisbane has seen particularly low supply levels the past few years. While completions are expected to rise in 2024, they remain moderate. Moreover, it is still difficult to commence new high-rise apartment projects in Brisbane due to competition for scarce construction resources, so ongoing project delays and cancellations should result in supply staying low for some time.
• Rental vacancy has been sitting around 1% in Brisbane for the best part of three years now. This has caused considerable dislocation of lower-income earners from the rental market, and with a moderate supply pipeline there appears little relief on the horizon.

Strong price growth starts to slow

• Rents have surged in Brisbane over the past three years in line with the tight market conditions. While growth remains strong, there are clear signs that the pace of growth is easing. With no real supply relief, this easing more reflects affordability and price resistance beginning to temper growth.
• Existing apartment prices have increased strongly in Brisbane over 2023 and continue to grow, but the pace of growth is slowing.

Outlook: No end in sight to construction woes

• Under-supply is set to build in Brisbane. Strong population growth and stronger investor interest must at some point translate into stronger levels of new apartment demand. However, it is the limited supply pipeline that is unlikely to change any time soon and that will tip the market further into supply imbalance.
• This under-supply situation is likely to keep upward pressures on both rents and prices over the medium term, although affordability may continue to temper growth a little from the very high levels recently.