While there’s been plenty of buzz around the current oversupply of apartments in Brisbane, the upside to declining property values is improved affordability. Asking prices for units are down about 1% to $380,000 over the three months to November 7, according to SQM Research.
Softening prices have also created great opportunities for investors looking for long-term growth.
Karen Young, principal at buyers’ agency Property Zest, says it’s important that investors stick to the fundamentals of buying a unit, such as being close to transportation, hospitals, and universities, as this boosts demand from prospective tenants. She added that smaller and older blocks tend to offer greater value.
“Look at older style units that have bigger spaces where you can potentially squeeze something new out of the floorplan,” Young told the Domain Group. “That means you can manufacture your growth instead of relying on capital growth.”
Buyers’ agent Wendy Russell said investors need to look for units with unique and attractive characteristics to improve their investment potential. “Pick a property with some scarcity factor where more people are going to want it and it’ll always be tenanted,” Russell told the Domain Group. “Even something with a courtyard, for example, might open up your options to tenants with young children or pets.”
While there’s an oversupply of units in the CBD and inner city, there are areas in Brisbane that aren’t oversupplied and have long-term growth potential, according to Russell.
For example, Paddington, situated 2km west of the CBD, continues to outperform Brisbane averages and is good for investors with a $500,000 budget. Another suburb Russell favours is Morningside, located 5km east of the CBD. The median price for a two-bedroom unit is $510,000, according to data from the Domain Group.
While the current oversupply of units has pushed rents down, high-quality units in well-serviced blocks are still producing strong rental yields, according to Herron Todd White (HTW)
Renovated blocks also produce stronger results. “If you can convince people in the body corporate to add value by maybe rendering or adding security fencing and things like that, you could really lift the value of the block,” Young said. “You need something to bring your property up into a different level of pricing.”