Brisbane is experiencing a residential building boom, with cranes dotted across a skyline that features an ever-increasing number of high-rise apartment blocks.
NICAD Developments, which builds blocks of up to 20 units, mostly in Brisbane’s inner-north, said concerns about a potential unit glut had scared off some buyers, who were worried their purchases could be worth significantly less in just a few years.
“There’s definitely fear,” said Adam Nicolo, who runs the company. “In particular, I’ve had two units signed and contracts crashed, based on the fear that there is an oversupply in Brisbane.
“There’s a lot of stock on the market; we’ve had a boom in construction, and the proof in the pudding so far is how quickly people are buying up or selling their stock.
“Talking to agents, sales have slowed up in the last five to six months, and to me that’s just a natural sort of adjustment to the market.”
The property research group CoreLogic RP Data estimates 44,500 units will be completed in Brisbane over the next two years, sparking fears of oversupply.
Chris Tinworth, a 24-year-old retail worker, bought an off-the plan unit early last year.
His apartment is in the 10-storey Orion Apartment complex in Coorparoo, four kilometres south-east of Brisbane.
“I have actually noticed that the rate in which the properties have been selling is much slower now, especially in the last few months,” he said.
“Property, like any investment, is a gamble, so you have to consider everything.
“I think … there might be some short-term losses, but in the long run, property purchases and investments in an Australian capital city are pretty sound.”
The Orion development is due for completion in August, with 92 per cent already sold
Research sparking glut fears ‘ridiculous’: KTQ
KTQ Developments, which built the Orion complex, argued there were some fundamental flaws in CoreLogic’s research.
“Of the 44,500 dwellings, that might be what’s been approved, but it’s ridiculous to assume that 100 per cent of that will be delivered,” KTQ chief executive Drew Steptoe said.
He said a figure less than half that would be more realistic, because it had become harder for developers to secure finance from Australian banks.
Mr Steptoe said those tighter lending standards would curb the number of developments that went beyond the approval stage.
“No one’s denying that there are more projects that have commenced in the market compared to a number of years ago,” he said.
“But I think from an industry point of view, we’re quite disappointed in some of the research that’s come out suggesting that 100 per cent of the stock that’s been approved will get built in the next two years.
“In the history of the property market, that’s never occurred.”
Units ‘attractive and affordable’ for first home buyers, investors
Brett Evans owns a panel beating business on the same street as the Orion development, and he bought a top floor, two-bedroom unit there as an investment.
He said units were an attractive and affordable option for both first home buyers and investors, and he was not put off by reports of a potential oversupply.
“I know lots of people who just don’t want to live in a house, don’t want to live in the suburbs, they want to live in the city, so I think units are always going to be popular,” he said.
Mr Evans owns two investment units in close proximity to Brisbane’s CBD, and is unfazed by speculation about a fall in apartment values and rents over the next few years.
“I bought these units with all the intention that if I have to drop the rent to $200 a week to put someone in it, I’ll do it,” he said.
“I haven’t set myself up to rely on an exact rental return to pay the loan back.”
But Mr Nicolo said owner occupiers were taking a much more cautious approach.
“Before, when things were hot, they didn’t have much time to think about their purchase,” he said.
“Now, we’ve gone back to a more normal market, where there’s a lot of choice and there’s not as much pressure on the potential buyers to buy something straight away.
“They’ve got time to assess things, come back, and there’s no urgency for them to buy.”