Brisbane’s apartment market has been underperforming lately – Domain data for the September quarter revealed that unit values were down 5.60% year-on-year, representing their largest annual drop in more than 18 years. While this may be unwelcome news for current Brisbane apartment owners, those hoping to buy into the city’s apartment market may think differently.
That being said, Brisbane isn’t short on apartments. There were nearly 110,000 occupied apartments in the Greater Brisbane area as of the 2016 Census. So where do buyers start? Here are some factors you may want to consider in your search for an apartment in Queensland’s capital.
Where in Brisbane should you buy an apartment?
Deciding which region or suburb of Brisbane you want to buy in is an important first step in narrowing down your options. Two significant factors which could influence your decision are cost and liveability.
Regarding cost, here are the median unit prices for Brisbane’s four regions as of September 2019, according to Domain:
- East – $414,000
- North – $378,550
- South – $394,000
- West – $440,000
When it comes to liveability, here are some of Brisbane’s most lifestyle-friendly suburbs as calculated by Realestate.com.au, based on factors including transit times to the CBD and proximity to the river, schools, and parks. Their median unit prices as of November 2019, according to Realestate.com.au, have also been included, where available.
- South Brisbane – $475,000
- Dutton Park – $411,000
- Spring Hill – $413,500
- Kangaroo Point – $460,000
- Corinda – $420,000
- Indooroopilly – $465,000
- Fortitude Valley – $388,500
- Petrie Terrace – N/A
- West End – $512,000
- New Farm – $530,000
How much do apartments in Brisbane cost?
As of September 2019, Brisbane’s median unit price was $375,179 according to Domain, making Brisbane’s unit market the fourth-most affordable of Australia’s capital cities.
However, median prices fluctuate by suburb and area, and these fluctuations can be significant. Looking at the suburbs listed above as an example, there’s a difference of just over $140,000 between the cheapest and most expensive suburbs on the list.
With this in mind, you may want to do your research and figure out which suburbs have median unit prices that fall within a price range you can afford. It may also be worth seeking the advice of a property market expert if you feel it’s necessary.
What are the pros and cons of choosing a Brisbane apartment as an investment?
The merit of choosing a Brisbane apartment as an investment option may depend on several factors, including your risk tolerance and the timeframe in which you’re hoping to see a return on your investment.
As previously mentioned, data from Domain has revealed that the September quarter saw Brisbane’s median unit prices down by 3.40% quarter-on-quarter and 5.60% year-on-year. However, the October 2019 Residential Report from BIS Oxford Economics is forecasting a 14% increase in value for Brisbane units by 2022.
Additionally, you may be able to generate more immediate cash returns if you buy in the right suburb at the right time. Property research firm and buyer’s agency Propertyology identified five Brisbane suburbs that can generate a positive pre-tax cash flow – Blackstone, Redbank, Springfield Lakes, Bray Park, and Bracken Ridge – and you may find that there are others in the Greater Brisbane region.
If you’re not sure if investing in an apartment in Brisbane is the right move for you, you may want to consult with a financial adviser or property expert for guidance.
Is Brisbane’s apartment market over or under-supplied?
The Real Estate Institute of Queensland said in September that Brisbane’s unit market is in the process of bouncing back from a prolonged period of oversupply, while data from BIS Oxford Economics also shows that oversupply is slowly but surely being reduced by rental demand.
Figures from PRDnationwide suggest the number of Brisbane apartments due to be completed in 2019 will be up by 70% compared to 2018. However, it is unknown whether this boost to supply will be met by a boost to demand.
Should I buy an existing Brisbane apartment or off-the-plan?
The question of whether or not you should buy an off-the-plan apartment in Brisbane is a personal one, but there are a few risks, benefits, and key pieces of information you may want to keep in mind when considering this option.
- CoreLogic data for August revealed that 43.1% of Queensland’s off-the-plan units were worth less at settlement than what their owners originally purchased them for.
- Fifty-eight of Brisbane’s 102 high-rise projects approved since 2009 had not yet begun construction as of August 2019, according to BCI.
- As of April 2019, half of all Brisbane off-the-plan apartments sold in the past eight years had lost money on resale, according to BIS Oxford Economics.
While the above information doesn’t automatically make buying an off-the-plan apartment in Brisbane a bad option for you, you may want to seek the advice of a property expert or financial advisor before jumping in.
Investing in an apartment or a house?
In order to decide whether you want to invest in a house or an apartment in Brisbane, you may wish to consider the area(s) in which you’re considering buying and the time-frame in which you’re hoping to see significant capital growth.
According to data from Domain, in the September quarter, Brisbane’s median house value decreased by 1% quarter-on-quarter and 1.8% year-on-year, whereas the city’s median unit value decreased by significantly more as mentioned previously, falling by 3.4% quarter-on-quarter and 5.6% year-on-year.
That being said, BIS Oxford Economics is predicting that, while it considers houses to be a relatively ‘safe bet’ when it comes to property investment in Brisbane, apartments in certain locations will likely outperform the housing market in the long term.
Before committing to investing in either a house or an apartment, it may be prudent to consider your personal circumstances and investment goals, and let them inform your final decision.
Can my choice of suburb affect the long-term value of my apartment?
Research from Propertyupdate.com.au supports the idea that, generally speaking, suburbs which are closer to the city centre and a river or beach tend to outperform suburbs which are further out and further away from water.
Propertyupdate.com.au also identifies the following suburbs as strong performers, where it predicts prices will continue to rise into the future:
- Chermside West
- Cannon Hill
Will you be able to afford the cost of living in Brisbane?
This year’s Worldwide Cost of Living survey from the Economist Intelligence Unit dropped Brisbane 15 places to 41st on the list, making it the third-most expensive Australian capital city on the list after Melbourne (22nd) and Sydney (16th).
The rankings were based on the prices of food, clothing, rent, transport, utility bills, private school fees, domestic help and recreational costs in each city considered.
Your ability to afford the cost of living in Brisbane as a home owner will depend on several factors, including your personal financial circumstances and the serviceability of your home loan.