The influx of new apartments in Brisbane may finally be beginning to bite developers, after a slowdown in sales forced prices to be slashed on a new development.
Domain.com ran a report in late March that focussed on the Belise Apartments in Fortitude Valley, where prices were reduced by nearly 25% in what the project’s marketing firm called a ‘dramatic’ price drop. This move came on the back of “years of unconventional sales tactics”, according to the article.
To further sweeten the deal, the developer has offered a five-year settlement deferment plan, with a minimum deposit of $60,000. Under this plan, buyers who pay a “reasonable” deposit – of $60,000 or more – can take possession of a unit and pay monthly lease fees – equivalent to rent – and settle only in five years, when the developer would hand over the title.
Despite these drastic measures, the 20-unit sale did not result in all units being sold.
In 2014, the same development stole headlines after it was revealed that 80% of apartments had been sold, and were touted as being the answer to “an undersupply of high grade property in Brisbane’s inner city suburbs”. The market has changed markedly since then.
Buyer’s agent Pete Wargent said the fire sale showed how hard it was to move investor stock in Brisbane.
“People read a lot into it but it’s a bit indicative of the wider market. It’s the end of cycle stuff for new apartments,” he said. “It’s been quite common. If you look around, even the smaller developments are finding the final apartment or two quite difficult to sell.”
Despite the difficulties of Brisbane’s inner city apartment market, Brisbane-based economist Kerrianne Meulman said the market was still softening in Brisbane, with an oversupply of low-end one- and two-bedroom apartments.
“There’ll be still more apartment stock to come,” she said. “The delivery of stock is slowing and that will be absorbed in the market. That’s just going to be the way that market will continue in the short- to medium-term.”
Ms Meulman said recent upticks in migration to Brisbane were being squandered, as demand for certain property types was going unmet.
“I can still see there is a missing middle in the Brisbane market and that’s townhouses, owner-occupier stock, and middle-ring suburbs; and that’s still at play,” she said. “In that sense there is still a mismatch in the stock that’s being delivered and the people who want to live there.”
