Leading Economic Forecaster Concerned of Potential Oversupply of Apartments

A leading economic forecaster, BIS Shrapnel, has predicted supply to outpace demand in a recent report on residential apartment construction, leading to a potential oversupply of apartments in most capital cities in Australia, including Brisbane.

The Building in Australia 2016-2031 report predicts the break neck rate of construction of new apartments in Brisbane will start to slide back from its unsustainable high from 2017 onwards.

BIS Shrapnel Associate Director Dr. Kim Hawtrey said low interest rates and reaction to stock deficiency put building activity into overdrive. “Low interest rates have unlocked significant pent up demand and underpinned the current boom in activity, but with population growth slowing and a strong backlog of dwellings due for completion, new supply will outpace demand”, he said.

However not all industry experts agree. REIQ CEO Antonia Mercorella believes otherwise, and said an increase in jobs will increase housing demand. “With major projects, such as Queens Wharf and Howard Smith Wharves, creating thousands of jobs over the next few years in Brisbane’s inner city we are confident demand for housing will continue to grow. We are seeing steady levels of supply and equally steady levels of demand for inner-city apartments.” she said.

Sources:

REIQ – Vacancy Rates Improve in Most Markets Ease in Inner Brisbane

BIS Shrapnel – Building In Australia 2016-2031

Written: 12 August 2016, Updated: 22 January 2020

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