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Brisbane Apartment Market Affordability

The latest data provided by the Real Estate Institute of Australia shows that as at the December Quarter 2014, Brisbane ranked as the third most affordable apartment market in Australia with a edian price of $385,000 (1). According to this data, Brisbane’s median apartment price is $127,600 more affordable than the national median of $497,200. When compared with Sydney’s median apartment values, Brisbane apartments are $222,100 lower and Melbourne $126,500 lower. The affordable position of Brisbane apartments is a becoming key driver underpinning increasing levels of interstate migration is resulting in uplifts in demand for apartments within Brisbane. With a continuation of escalating demand, growth in median values will follow suit with the Brisbane median expected to climb to the $400,000 mark by December quarter 2015.
(1) Real Estate Institute of Australia – April 2015

Australian Capital Cities – Median Unit Prices

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Inner City Residential Apartment Market Property Clock

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Brisbane Inner City Apartment Market

Brisbane’s inner city apartment market is comprised of 21 suburbs which sit within a 5-kilometre ring of the CBD. Brisbane’s inner city apartment market currently occupies an opportune position on the property clock, sitting at 7 o’clock. The market has entered its next growth phase with underlying fundamentals in place for a continuation of improving levels of demand in the face of what remains an undersupplied market. Opportunities to capitalise on the market’s upswing are apparent across both underlying values and rental returns. Both long term (10 year) and short term (5 year) demand has remained relatively stable at 3,800 and 3,500 apartments respectively. During the market’s peaks in 2007 sales volumes rose to sit at 5,100 in line with introductions of new apartment developments into the inner city clearly demonstrating the market’s capacity and willingness to absorb new apartment supply as it enters the market.

Combined Catchment Area - Drivers of Demand

Both long term (10 year) and short term (5 year) demand has remained relatively stable at 3,800 and 3,500 apartments respectively. During the market’s peaks in 2007 sales volumes rose to sit at 5,100 in line with introductions of new apartment developments into the inner city clearly demonstrating the market’s capacity and willingness to absorb new apartment supply as it enters the market.

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Education

There are around 73,000 tertiary students all studying at institutions located within a 7 kilometre radius of the Kangaroo Point/South Brisbane and Woolloongabba precinct who are a key contributor to demand for rental dwellings throughout the precinct.

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Rental Market Conditions - Apartments

Based on the latest data supplied by Australian Property Monitors the median asking rental yield within Kangaroo Point currently sits at a healthy 6.5% which is one of the highest in the inner city.

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Apartment Market Fundamentals

Over the past ten years, the median price of an apartment within South Brisbane has grown by an average annual rate of 3.4%. Over the past two years this rate of median price growth has risen to 6.6% highlighting the strength of residential apartment market conditions within the suburb. Current supply levels of off-the-plan apartments are particularly low, with just over four month’s available supply pointing to a market which may be approaching a state of under supply.

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Employment

The Kangaroo Point/South Brisbane and Woolloongabba precinct is not only within a 5 kilometre radius of Brisbane’s CBD with an estimated workforce of 156,545 but is situated adjacent to two of the three largest medical precincts in the State. In line with a growing economy, Brisbane CBD’s workforce is projected to increase by 65,633 by 2031, to reach 222,178 people. This large expansion of the CBD’s working population will be a key factor underpinning sustained dwelling demand throughout the area in the coming years. South Brisbane is the largest fringe employment node in Brisbane with a number of large national and international firms with offices located within the suburb. The estimated workforce within South Brisbane sits at 22,750 which is forecast to more than double to reach 46,450 workers by 2031, representing the creation of 23,700 new jobs. Woollongabba is home to the Mater Health precinct which is one of the three largest health nodes in the State. The Princess Alexander hospital is situated in the neighbouring suburb of Buranda is one of the state’s three major hospitals. Medical personnel and support staff are a primary driver of dwelling demand throughout the suburb. The most recent data shows Woolloongabba’s workforce sitting at 15,830 which is forecast to reach 35,400 by 2031 translating into an expansion of 19,550 persons (or a growth of 123%).