Researchers Reject Apartment Crash Theory

Property researchers have rejected the theory that Brisbane’s off-the-plan apartment market will crash due to potential oversupply, citing development funding restrictions by banks and increasing construction costs as factors curbing a surplus of supply in inner Brisbane.

Resolution Research director Diana Howes predicts Brisbane values to remain equal to their current contract values, rather than experience a drastic collapse. “We reject the notion that the market is currently on the cusp of a major valuation risk phase – with developers still reporting valuations at, or close to contract values,” she said.

Ms Howes also claims tighter lending conditions and less development funding from banks will keep Brisbane’s apartment market afloat, by limiting the supply of apartments to a sustainable level.

Place Advisory director Lachlan Walker also rejects a claim by CoreLogic that 80,000 apartments would be delivered into Brisbane’s market, as many have yet to be approved and 4,000 have been deferred.

“This figure assumes that 100 per cent of all stock will be funded, which is unequivocally not the case in an environment where we have seen three of the big four banks state that they are no longer funding apartment developments within inner Brisbane,” he said.



Written: 31 August 2016

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