Sunday, October 5, 2014

Oversupply of Brisbane Units

There have been a number of articles this year regarding an oversupply of apartments in Brisbane, especially new high-rise in areas close to the city.  A large number of apartment buildings have completed recently, but there are many more on the way.  Most of the new apartments are being sold to foreign investors, and will be rented.

At present, a higher than usual number of apartments are available for rent in Brisbane.  Agents are reporting that it is taking a long time to rent apartments, and that rents are falling.  For example, a very nice riverfront apartment was without a tenant for 4 weeks, and finally rented for $50 a week below the asking rent.  Some owners are offering 4 weeks free rent.  For third-tier apartments, the rents have dropped dramatically.  The situation is not likely to improve any time soon.

When the foreign investors come to sell, they will not be able to sell to other foreigners.  So the pool of potential buyers will be much smaller.  This will cause significant price decreases for resales of apartments.  Currently, many apartments that are not being sold by developers (i.e., not new apartments that have FIRB approval) are taking a long time to sell in Brisbane.

Some articles of note:
Bubble Deflating
Warning on Brisbane apartment boom
Not pretty
High-rise Oversupply?
Prices Down Due to Oversupply
Areas to Avoid
Yield Compression
Mixed Outlook
Prices Plunge

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