Apartment approvals continue to drop in Brisbane and Melbourne, while Sydney is still struggling to build fast enough to provide affordable housing for its population.
The Knight Frank Australian Residential Review – December 2016 report shows Melbourne and Brisbane building approvals to have dropped significantly since July quarter last year (-26% and -23.9% respectively). Sydney approvals have increased by 22.7% however over the same period.
Over the same period rental yields have contracted over the east coast, despite a rental $ growth increase over all eastern states. Brisbane showed the highest vacancy rate of 4%, with Melbourne and Sydney at 2.5% and 1.7% respectively. Median apartment rental in Brisbane was $380, Melbourne at $415, and Sydney at $560.
Melbourne and Brisbane saw median apartment values increase over October while Sydney values slipped by 0.1%. Brisbane still has the best rental yields of all three cities, with rental yields sitting at 5.21%.
Sinking approvals and higher vacancies in Brisbane are continuing proof of the slowing market. The question we need to ask ourselves is where is Brisbane in this cycle now? With a huge and expanding affordability gap to both Sydney and Melbourne and very high rental yields, it is only a question of time to investors re-discover the Brisbane market.