Property research | 3 min read

Positive Signs for Brisbane Apartment Market

Michael Zaghini
Michael Zaghini
11/11/19

The Brisbane apartment market has reached a turning point with a thinning supply pipeline, while robust employment and population growth, decreasing interest rates, and easing credit restrictions drive a resurgence in sentiment and demand.

The recently released November 2019 JLL Residential Research Report announced some extremely positive news on the Brisbane apartment market now stabilising, and expected to experience moderate price growth within the next 12 months.

Brisbane Apartment Market Overview

Brisbane‘s apartment supply has been steadily falling for several years now. Largely due to an increase in employment and subsequent population growth, the much-reported oversupply has been absorbed. And given the substantially diminished pipeline of future projects, there are now fears of an impending undersupply. The report noted, “the outlook for Brisbane apartments is strong, with fears now flipping to ones of undersupply in coming years.”

Inner Brisbane Supply Pipeline by Status

Assisting with demand are record low interest rates and easing credit conditions which have resulted in a significant boost in market sentiment. The sustained demand is being supported by strong population growth which will be driven further by increased employment growth associated with Brisbane’s major infrastructure projects.

Key Market Indicators: Inner Brisbane

The Brisbane apartment market recovery is now evident through the strengthening rental market indicators. Apartment rents for the 3rd quarter of 2019 show significant improvement, with 2- and 3-bed apartment rental returns rising by 2% and 4.7% respectively. Both Brisbane and the Gold Coast are experiencing growth in rental yields, with Brisbane’s gross rental yields increasing to a very healthy 5.2%, which is forecast to fuel greater residential investment demand.

National Gross Rental Yields (Apartments)

Queensland Economic Outlook

Across the state, Queensland’s economy is being boosted by increasing migration and strong population growth, which is reflective of increased employment opportunities. Recent coal and gas exports, along with a robust tourism industry, have also given the Queensland economy a strong boost.

The retail sector in Queensland rebounded in 2019 with an increased turnover of 4.3%, leaving it only narrowly second in the Nation to Victoria (4.5%). This is a substantial turnaround from the same time last year when growth was a very anaemic 1.2%.

The demand for goods and services in Queensland in the previous year was a low 0.4%, however, Deloitte Access Economics forecasts Queensland’s State Final Demand will increase by 2.9% in 2020 and 3.9% in 2021.

Overall Brisbane Outlook

With the massive public and private investment in infrastructure in Brisbane, including the Cross River Rail and Queens Wharf, which are under construction, Brisbane’s apartment values will benefit. Increased job demand and subsequent population growth, combined with the decreasing supply and positive sentiment from improved lending conditions, will continue to drive positive rental and price growth in 2020.

Source: JLL, Australia Residential Research, Brisbane Apartment Market, November 2019