Brisbane’s apartment supply shortage will only get worse: JLL

The supply pipeline will remain lacklustre in the next few years.

In a report, JLL said the supply shortage in Brisbane’s apartment market will only get worse as the demand recovery continues to build momentum and supply completions remain moderate for at least several more years. 

“Despite the will to develop, the practical challenges of delivering major apartment projects are expected to remain for some time to come,” the report said.

Here’s more from JLL:

Tight rental market conditions are also unlikely to change, but rental growth will be somewhat constrained by wage growth as affordability is tested. Price growth is likely to remain strong, not only supported by market balance but by cost-push pressures on build costs for new apartments.

Demand remains mixed

Despite headwinds from higher interest rates, underlying demand for Brisbane housing continued to grow as a result of strong population growth and steadily recovering investor demand.

Apartment pre-sales demand remained focused on smaller high-end projects that appealed to owner-occupiers, particularly downsizers. Demand for larger mass-market projects was still more muted, but there has been very little stock available in this part of the market for buyers to choose from.

Under-supply continues to grow

While Brisbane apartment completions will be higher in 2024 than over recent years, the level of supply will still be moderate. With developers struggling to progress larger high-rise projects, this is unlikely to change over the foreseeable future and Brisbane is likely to push further into under-supply over at least the next few years.

Rental vacancy was 1% in March 2024 and has been around this level for an extended period now. With only moderate new supply due the next few years and very little of it targeted at the rental market, vacancy is likely to remain low over the foreseeable future.

Prices grow strongly

The lack of existing and new apartment stock available has been reflected in strong recent price growth. Brisbane’s median existing unit price has grown 17.4% over the year to April 2024 (CoreLogic), which has exceeded growth in detached houses over the same period.

Rents have also grown strongly in line with low vacancy. 2-bed unit rents in Brisbane have grown by around 43% over the past three years. While growth has remained strong in 2024, there are some signs affordability is starting to constrain growth, particularly at the top end of the market.

Note: Brisbane Residential refers to Inner Brisbane apartments. Pricing data sourced from CoreLogic. Vacancy data sourced from REIQ. Rental data sourced from JLL Valorem