Herron Todd White‘s Month in Review reveals investors are benefiting from historic oversupply. Image – Canva
  • ABS data shows a steep decline in the value of new loan commitments for investor housing
  • In Brisbane, the vacancy rate sits at 0.8%
  • Herron Todd White Director says the inner-city unit market had an oversupply about eight years ago

Queensland is feeling the effects of the nationwide elevated interest rates hindering property investment and the widespread tight rental market; Herron Todd White‘s latest Month in Review report reveals inner-city units are still finding favour with investors.

ABS data displays a steep decline in the value of new loan commitments for investor housing. In January 2023 there was a national 6.0% drop to $7.4 billion which is 34.8% lower compared to a year ago, in seasonally adjusted terms. A similar trend was seen in Brisbane.

The tenth consecutive cash rate rise announced this month means mortgage commitments are even more expensive.

Despite this, Herron Todd White Director, David Notley says in the Month in Review report that inner Brisbane investors are benefiting from a historic oversupply of units.

"The inner-city unit market was impacted by oversupply about eight years ago. There were just too many units being built compared to buyer demand," Notley explains.

"As such, many who bought off-the-plan investment stock saw their values retract below the original contract price and the plethora of available units for lease had renters in the box seat."

That has now been flipped on its head, according to Notley. He says there is still a reasonable level of available unit stock to buy.

"Our inner-city units are finding favour with investors – both local and from interstate."

David Notley, Herron Todd White Director

"Investors can enjoy a very healthy return on their purchase price and there are longer term benefits from holding an inner-city asset too, particularly given increased infrastructure spending and the promise of an Olympic boost to the local economy.

"While there seems to be unit stock on the market for buyers, renters are struggling to find accommodation."

Vacancy low, rents on the up

In Brisbane, the vacancy rate sits below the national average with just 0.8% of rental properties currently available according to SQM Research.

"High demand for rentals means vacancies are low and rents are rising," Notley explains.

Brisbane Rental Vacancy Rate

Brisbane and southeast Queensland more generally have historically been safe bets for most property investors.

"While not without challenges, property prices have always tended to move in a relatively undramatic fashion in our region."

David Notley, Herron Todd White Director

Notley says the Brisbane property prices are still far from immune to the impacts of unpredictable events like floods and the rise in interest rates in 2022.

"But all in all, we’re known to have reasonably stable price movements over the long term," Notley says.

According to CoreLogic data, Brisbane's housing prices experienced a decline of 3.2% during the three months to February 2023, which is higher than the national average decline of 2.3%.

Since September of last year, the rate of decline in home values across the nation has been gradually easing.

As of February, Brisbane's home values are 11% lower than their record high, which was achieved in June 2022.

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