Brisbane and the Gold Coast see apartment sales growth

New apartment properties on Australia’s Gold Coast and in Brisbane are seeing sales rate improving and general real estate market sentiment is increasingly positive, according to the latest research from Colliers International.

The firm’s most recent forecast report indicates both Brisbane and the Gold Coast markets are tracking above five year average sales volumes, with Brisbane significantly above and Gold Coast just starting to gain traction.

Brisbane has experienced higher sales rates throughout the year resulting in 2,300 total sales for the 12 months to the end of September. Total sales on the Gold Coast for the same period are sitting at just over 700.
 
The report says that low vacancy rates, rental and population growth, low interest rates and rising dwelling approvals are all key factors in creating an ideal environment for investors and owner occupiers to purchase and take advantage of the affordable loans that are available.

It points out that activity has remained at an elevated level in the inner Brisbane apartment market since the first quarter of 2013 due to increased demand for inner city living with a significant number of project releases leading to uplift in sales.

In the third quarter of 2013, 645 unconditional sales were recorded across 48 projects, its highest point in nine years. The inner south continued to attract the majority of purchaser demand accounting for 290 unconditional sales followed by inner north with 226 and inner west where 89 unconditional sales were recorded, respectively.

According to Alex Beer, senior research analyst at Colliers International in Brisbane, the supply is not a concern, with about 3,200 apartments proposed for release in the next 12 months. ‘Should favourable lending conditions and investor demand remain robust, the market may be able to absorb this supply over the next 12 months at the rate we have experienced in the previous few quarters,’ he said.

‘The Royal Bank of Australia could be forced to temporarily adjust its monetary policy settings if dwelling prices in Sydney continue to grow at an unsustainable rate. However it is not likely that this would happen across all capital cities, so any interest rate increase would be for a short period,’ he added.

The prices in the inner Brisbane have remained largely unchanged over the last 12 months with September quarter recording a weighted average sale price of $532,900, falling 4% from second quarter 2013 and down 1% from the same period in 2012. However this decline was largely representative of the type of stock sold over the quarter.

‘In comparison to southern states we are seeing a lot of interstate investors entering the market to take advantage of the rising income returns. According to RP Data-Rismark, yields for Brisbane apartments are now well above the national average,’ explained Beer.

‘There is a lot of high quality stock coming onto the market, with emphasis on finishes and larger two bedroom plus apartments. This is aimed at the owner occupiers who are more active in the market now than they were two years ago,’ he said.

Andrew Roubicek, residential director at Colliers International in Brisbane, pointed out that there is strong interest from owner occupiers for quality, well designed product in the $1 million to $3 million price range, something that is being experienced with Sunland Group’s new project Abian.

‘Demand is strong across all buyer segments, but in particular there is greater appetite from South East Queensland investors who are re-entering the local property market, level of activity we haven’t seen for four years,’ he said.
He expects to see bigger supply of three bedroom apartments moving into 2014 and 2015 as there is greater demand from empty nesters that are downsizing and moving to inner Brisbane.

‘In 2014 the two hot spots are going to be Kangaroo Point and Toowong due to lack of supply in these areas, their established infrastructure and proximity to river and the Brisbane CBD,’ he added.

The report also shows that Gold Coast apartment sales volumes for the year to date have already exceeded figures for the previous year, with one more quarter still to report.

Lynda Campbell, Research Manager at Colliers International Gold Coast said the September quarter has recorded 184 sales taking total sales for 2013 to 552 which is slightly higher than the 546 reported for the full four quarters of 2012.

‘The current supply of new apartments on the market is sitting at 800, the lowest level in approximately 12 years. If the current sales rate continues, supply will be taken up within 13 months,’ she said.

She pointed out that while there is ample new supply in various stages of planning, it is not expected that the market will be flooded with apartments as developers remain somewhat cautious and have to consider various elements before taking a new project to market.

Sales in the medium rise sector exceeded low rise and high rise sectors with 92 sales recorded across 10 projects with most located in the North Shore precinct. Only 138 medium rise apartments remain on the market, the majority of which are held within the North Shore precinct.
 
‘The best performing project was Aquilo at Harbour Quays with 55 sales for the September quarter. Aquilo is the fourth stage of the Emandar Groups Harbour Quays project and has been selling exceptionally well mainly due to affordable price points,’ explained Campbell.
 
Tony Holland, residential director at Colliers International Gold Coast, explained that as a sign of confidence in this market he expects to see at least three new large scale high rise projects commence construction in the first half of 2014. 

‘Available new apartment stock is at historic low levels, quarterly sales volumes are up almost 30% on the same period last year, local confidence is growing rapidly and demand is strong from both interstate and overseas buyers. It is clear that we are at the start of the next upward cycle on the Gold Coast,’ he added.