Brisbane apartments heading for oversupply

Momentum Wealth’s research report, Property Market Spotlight: Brisbane, found that the price performance between houses and apartments is likely to widen due to a supply disparity between them.

“The research report explains that as the pipeline of new apartment projects comes to market, it’s going to weigh on rental returns and capital growth for these type of assets, particularly in those areas with a high concentration of new stock,” Momentum Wealth managing director Damian Collins said.

However, Mr Collins noted that the research report also shows that the number of houses under construction is in line with the 10-year average.

“[This means] that this segment will not reach a state of oversupply at current rates, which will help to buoy prices,” he said.

According to the report, the suburbs with the highest concentration of apartments approved for construction are South Brisbane (2,084), Brisbane City (1,731), Newstead – Bowen Hills (1,493), West End (846) and Chermside (704).

Mr Collins advised investors to avoid apartments in areas with high levels of new supply.

“When it comes to market, the new stock will weigh on capital growth of similar stock in the surrounding areas,” he said.

“While we don’t expect all of these new apartment projects to go ahead, there will still be a considerable amount of new apartment supply coming to market in Brisbane over the next few years.”

[Related: Brisbane property market begins to slide]