The pipeline of construction in the Brisbane apartment market is phenomenal.
There are 18 projects, or 2,600 apartments, under construction that have already sold out. Another 50 projects are under construction and their 9,170 apartments are being actively marketed, with interest strong. Another 33 apartment developments are in the pre-construction phase. And on top of this, another 21,000 apartments have not yet hit the market.
Yet Lachlan Walker of Place Projects believes there is still strong demand for high-quality apartments.
"Brisbane's a big market," he said. "There's a lot of chat around that Brisbane's heading to oversupply. There are suburbs in Brisbane that are going to be oversupplied markets, but there's still a lot of demand out there. The apartments are selling. They're being rented out. The older product that's been around for 10 or 20 years is going to suffer in the short term, because there's going to be a flight to quality, and the newer apartments.
"But the owner-occupier, higher quality market is undersupplied," said Walker.
Place Project's State of Place report, shows that the apartments in the pipeline are being built in two main zones - the Inner North-East (from the CBD and Fortitude Valley up to Newstead), and the West End-South Bank Peninsula of the Brisbane River including Woolloongabba. Of all Brisbane's new apartment stock, 72% will be in this central area.
The report also describes how the type of apartment being built is evolving. Apartments are getting larger, as owner-occupiers become a larger share of the market. In 2012, 51% of apartments had one bedroom, and 44% had two bedrooms. In 2016, 42% of new apartments will have one bedroom, 53% will have two bedrooms, and 5% will have three bedrooms. By 2018, 42% will have one bedroom, 50% will have two bedrooms, and 7% will have three bedrooms.
"In Brisbane, there is a change in culture," said Walker. "We'll have families that grow up in apartments in the future.
"Three bedroom apartments are selling more quickly at the moment. Over the last five years we've had a lot of demand for the more affordable stock, but that has changed in the last twelve months. The owner-occupier is starting to come back."
Walker said 2016 could be patchy, with the uncertainty of the federal election causing many to put purchasing plans on hold.
"The next 12 months is going to be hit and miss," he said. "I think there's going to be some big success stories, but there could be a bit of pain out there, particularly where developers are not people who've been in the game for a long time, and don't know what they're doing. Banks are tightening up. Construction costs are going up, and prices in Brisbane are yet to move. There's going to be a pinch there. But longer term in Brisbane, we're hoping to get some growth after the federal election, when there's a bit more certainty about where we're going."