The performance between houses and units in the Brisbane property market will continue to widen, as housing supply stabilises and apartments head for oversupply, according to a new research report.
The Momentum Wealth study, Property Market Spotlight: Brisbane reveals apartment approvals in Brisbane remain considerably higher than their 10-year average, while approvals for new houses remain around normal levels.
The report found that while Brisbane exhibits positive demand-side fundamentals, including a growing labour market, a balanced economy and high housing affordability, the difference in the supply-side fundamentals will lead to a widening in dwellings disparity.
Momentum Wealth managing director Damian Collins said it is likely a greater divergence between the performance of houses and apartments will occur, given these supply-side fundamentals.
“The research report explains that as the pipeline of new apartment projects comes to market, it’s going to weigh on rental returns and capital growth for these types of assets, particularly in those areas with a high concentration of new stock,” Mr Collins said.
“However, the research report shows that the number of houses under construction is in line with the 10-year average, meaning this segment will not reach a state of oversupply at current rates, which will help to buoy prices.”
According to the report, the suburbs with the highest concentration of apartments approved for construction are South Brisbane (2,084), Brisbane City (1,731), Newstead – Bowen Hills (1,493), West End (846) and Chermside (704).
“Investors should avoid apartments in areas with high levels of new supply waiting in the pipeline,” Mr Collins said.
“While we don’t expect all of these new apartment projects to go ahead, there will still be a considerable amount of new apartment supply coming to market in Brisbane over the next few years.”
“Investors should instead focus on established houses, in inner metropolitan areas with large land content and low supply.”