The turnaround in the supply-demand dynamic is already being seen in Brisbane unit market in 2020 and beyond
According to the latest CoreLogic report, the narrative of over-supply and under-performance in Brisbane units has dominated conversations around south-east Queensland property for almost 5 years. At January 2020, Brisbane unit values remain 11.5%.
Data indicates that 2016 was a time when units were being built across Brisbane at an unprecedented level. ABS completion data suggests 21,342 units were completed, against a historic average of 11,585 per year.
In the December 2016 quarter, the number of unit completions even eclipsed the number of houses delivered across the state. It is difficult to understand the exact impact this supply has on the Brisbane unit market, given that ABS completions data is currently unavailable beyond a state level on a quarterly basis.
However, cross-referencing the approvals dataset with the ABS data by region series, suggests about 75% of state-wide unit construction was centred within the Greater Brisbane metropolitan region. Future housing demand is also estimated based on the Queensland government ‘median’ scenario of population projections, suggesting about 8,000 dwellings are required to house the growing population each quarter to June 2021.
With approvals data suggesting a decline in construction, and steady estimates of population growth, Queensland dwellings may fall into under-supply in the year ahead. The turnaround in the supply-demand dynamic is already being seen in unit values. Since bottoming out in June 2019, CoreLogic indices show the Brisbane unit market has recovered 2.2% This fits in with a more broad-based recovery, as reductions in the cash rate have reduced the cost of servicing debt, and increased incentive to purchase the property. We are likely to see more investors pouring in their investment in this market.