The Financial Review recently published an article addressing Brisbane’s current new apartment supply, and we wanted to share it here.
We have been cautious when assisting customers with off-the-plan finance in the last little while, as we felt Brisbane was at risk of oversupply and a subsequent decrease in valuations. A decrease in valuation between contract signing and settlement can be quite problematic if it’s not discussed and planned for up front.
Talk with your broker before committing to contract on an off-the-plan purchase – The finance requires considerations that other types of purchases simply don’t. If you have any concerns or queries, don’t hesitate to contact us anytime!
Here’s the article, by Matthew Cranston:
The number of new apartments expected to be launched in Brisbane between now and June next year has suddenly dropped 25 per cent as developers struggle to get funding or encounter planning delays.
There have been concerns that Brisbane along with other Australian cities is facing an oversupply of apartments. However major groups such as La Salle and Invesco – both for which have deep pockets – are confident of Brisbane’s new apartment market.
However, the latest data from Urbis shows that apartment sales in Brisbane hardly increased in the September quarter and that the amount of planned apartments has been dramatically scaled back.
Urbis associate director Paul Riga said 19 new projects are expected to launch between October 2016 and June 2017, bringing a potential 3600 new apartments to the Brisbane market.
Last quarter, it was estimated that 31 developments and 4856 potential new apartments would enter the market in the same timeframe.
“It is either that the planning side of things is taking longer or they need a certain level of funding and can’t get it,” Mr Riga said.
“We saw 15 new projects launch this quarter across Inner Brisbane, down from 21 projects in the previous quarter.”
Dan Holden from financier and broker Holden Capital agrees with the assessment that the difficulty in funding has lead to projects being shelved.
“It has increased to a point where only well-heeled developers with long track records and strong balance sheet will get support from major banks or alternative funding.”
“As a result of this many planned projects will not see the light of day at least in this cycle.”