Why are luxury apartments booming in Brisbane?
Prestige apartments in Brisbane’s inner-city are hot property, with a growing number of local and interstate downsizers looking for large, well finished lifestyle apartments at prices that represent far greater value compared to Sydney and Melbourne.
The recent construction boom might have created a temporary oversupply in Brisbane, but the best of the best apartments are in high demand. The value gap between the southern capitals and Brisbane remains significant and as a result we’ve experienced an influx of out-of-area downsizers.
One of the reasons for increased downsizer activity is that more buildings are nearing or at completion, which allows owner occupiers their preference to actually see properties before purchasing. When they were in pre-sale stage, the bulk of buyers were a mix of local or foreign investors.
Downsizers are being driven by the volume of high quality new stock available and an increasing desire for low maintenance living.
Brisbane’s inner city has changed with many vibrant dining and entertainment precincts that come alive at night. Middle aged buyers are increasingly wanting to ditch the maintenance of a house for a riverside apartment with eateries at their doorstep.
Fewer new projects are being launched in Brisbane this year and buyers are realising that absorption of excess stock is underway.
New market confidence
Drew Davies of McGrath New Farm says an uptick in high end apartment sales over the past year has instilled new assurance in the market.
He just sold a luxury one bedroom riverfront apartment for $2.625M. This was an exceptional price and a good demonstration of how highly sought-after the highest quality properties are and the premium buyers are willing to pay to secure them now. In fact, this property was snapped up before the marketing even commenced.
Drew said: “When comparing Brisbane’s inner-city market to Sydney and Melbourne, it’s a much cheaper price point and represents incredible value when you look at the growth and infrastructure upgrades happening throughout South-East Queensland.”
In my view, Brisbane is one of the world’s great cities and there is a lot more growth to come over the next few years.
Topping the charts
Just recently, Brisbane appeared for the first time on the internationally recognized Knight Frank Prime Global Cities Index, which measures the top 5% of a city’s housing market by value and is considered a means of gauging where luxury prices are headed at a time.
According to the Index, demand for high-end property in Brisbane led to 3.6% growth over the past year. Researchers attributed Brisbane’s new ranking to the growing demand from downsizers.
The latest CoreLogic Hedonic Home Value Index also reveals a healthy prestige market in Brisbane, with 1.05% growth in the top quartile over the past 12 months. Whereas Sydney (-8.0%) and Melbourne (-4.1%) both reported falls across the most expensive quarter of the market.
Individual suburbs have done even better. CoreLogic figures for the 12 months to April 2018 show South Brisbane had 280 sales at a median price of $587,500, representing 20.6% growth.
Even suburbs reputed to be in oversupply, such as Newstead, recorded growth. Newstead had 262 sales over the year at a median price of $639,500 and annual growth of 7.2%.
Brisbane downsizers have a particularly good opportunity in front of them today. They can put a big chunk of money from the sale of their homes into super, they can take their time looking around with more newly-built stock to choose from and they have less competition due to tougher credit policy.
In terms of the wider apartment market, the oversupply will dissipate – as it always does, over time.
Looking ahead, Drew said: “A wave of major infrastructure and development over the next five years will dramatically alter the Brisbane CBD and inner suburbs, and if the banks regain their appetite for lending it could be the perfect storm Brisbane has been expecting for years.”
In my view, Brisbane and South-East Queensland present the best opportunities for value and growth thanks to their liveability, affordability, scale and future economic prospects.
Published: Tuesday, August 14, 2018