Rents for Brisbane apartments have fallen by as much as 17 per cent over the past six months amid an unprecedented flood of unit developments on to the city’s market, according to one of Queensland’s biggest property managers.
Prominent agency owner Andrew Coronis, managing director of Coronis, which operates 23 offices across southeast Queensland, said tenants were moving more readily to get better deals, forcing existing unit stock and “investor-style” apartment owners to cut prices.
Brisbane’s market has suffered a sharp turnaround with a collapse in off-the-plan apartments to one-third of the level compared to last year and strain in the construction industry resulting in builder CMF Projects going into administration.
“We’re seeing a 17 per cent drop in rents and it is happening right now,” Mr Coronis said. “It is between 10 (per cent) and 17 (per cent). Everybody is scrambling to lock tenants down.”
Mr Coronis said gave the example of an older sixpack style unit block in suburban Chermside where previous rental income was about $420-$430 and would now attract between $350 and $360 a week.
Coronis agencies manage more than 8000 properties from the Gold Coast to the Sunshine Coast. Mr Coronis stressed that he was bullish about the long-term prospects of the Brisbane market and said the major oversupply would resolve over the next two to three years. He said high-quality apartments continued to attract strong interest and rents.
The warning comes after Real Estate Institute of Queensland figures showed the official vacancy rate in inner Brisbane was 4.4 per cent, the highest proportion since the global financial crisis. The previous peak was 4.1 per cent in the December quarter of 2013.
Across the wider Brisbane area, the vacancy was 3 per cent, down from the September-quarter peak of 3.3 per cent. The Brisbane city centre vacancy rate was 3.7 per cent.
A report from Place Advisory released this month showed Brisbane’s off-the-plan sales have fallen to the lowest level since June 2011. Last quarter there were 272 unconditional transactions, a 13.7 per cent drop since the previous quarter.
Mr Coronis said the uptake of investors in the new-build sector in the city’s unprecedented apartment-development rush over the past three years had led to fewer investors scoping the market.
But he said there were no more distressed sales than usual because people continued to extract a reasonable yield in the low interest rate environment.
“The benefit for the community is the affordability,” he said. “Until the surplus gets taken up it will be a great time for renters.”
The changing market dynamics have spurred Coronis to change its approach to property management, placing a greater emphasis on assisting tenants through the rental process.
Originally Published: http://www.theaustralian.com.au/