52 Apartment Projects Stalled as Oversupply Looms over West End and Other Inner City Suburbs

The desirability of West End and other inner-city suburbs did little to prevent an oversupply situation in the apartment sector. This has resulted in some 52 apartment projects being stalled or completely abandoned in the past year.

With projects being stalled, it means that around 10,000 units will be removed from the market.

A recent report from economic analysis and forecasting group, BIS Oxford Economics, indicates that rapid completion of apartment buildings in West End and other inner-city suburbs has brought the market into saturation.

The oversupply, which is predicted to last until 2025, has left nearly 20% of apartments in the area unoccupied.

Overdevelopment Taking Its Toll

Some developers have backed out from project development due to factors such as declining investor demand, and restrictions on interest-only loans. Adding to the issue are growing development costs and lower income from rent.

The saturation of the apartment market in the inner city is a result of what is seen as overdevelopment in the inner-city.

In recent years, the area has experienced rapid and record growth in terms of apartment building development. During the 2017-2018 financial year, an estimated 8,300 units will be completed, an increase from the 5,700 units built in the previous year. In 2019, some 5,000 units are expected to be built.

West End, CBD, Spring Hill and Toowong and Hamilton are ahead of other Brisbane suburbs when it comes to the number of apartments coming to the market.

West End was seen to lead the rest of the Queensland in the property market. However, the rapid development of high-rise and large-scale projects posed a negative effect on investor income.

Read: West End Seen to Lead Growth in Queensland Property Market in 2018

The growing number of high-rise residential projects in the area has left many units unoccupied. With supply drastically overcoming demand, rent prices eventually plummeted.

Concerned locals have voiced out concerns over the growing number of high-rise developments in the area. Among the more vocal critics is Councillor Jonathan Sri (The Gabba), who believes that the focus should be on making dwellings affordable and not large apartment projects.

Read: Subtropical River Garden or Madness? New 12-Storey Building Proposed for West End

Market Correction

Despite the shelving of 10,000 apartments, some industry experts are not worried. They see the situation simply as the market correcting itself.

Developers are reacting to the saturation in an effort to limit supply. But optimists still think that eventually, the market will boom again and will see those 10,000 units completed in a few years.