First home buyers to be big winners from apartment fire sale: BIS Oxford Economics

first_imgHigh-density dwelling commencements will plummet in Queensland this financial year, according to BIS Oxford Economics.The latest housing finance figures for January reveal more than 20 per cent of the loans taken out in Queensland during the month were by first home buyers.And nationally, demand for interest-only loans — usually taken out by investors — has dropped to a new historic low of 15 per cent of new lending, according to new figures released by the Australian Prudential Regulation Authority. money editor Sally Tindall said the results confirmed APRA’s interventions were having a marked effect on new borrowing. BIS Oxford Economics predicts Brisbane’s inner-city apartment oversupply will be absorbed.Mr Mellor is optimistic Brisbane’s inner-city apartment oversupply — set to peak at 14,000 excess dwellings — will be absorbed as buyers look to take advantage of the bargains on offer, resulting in a shift in demand away from houses.“We will get through this oversupply,” Mr Mellor said.“While we thought the damage would be restricted to inner Brisbane, some people, particularly young people may be attracted to the cheaper prices of apartments offered by developers.“It depends how big a fire sale it is.” HOUSE PRICES ON THE UP AFTER GAMES BRISBANE’S REAL ESTATE YOUNG GUNS INTEREST-ONLY LOANS HIT HISTORIC LOW Some developers have already slashed the prices of apartments in their projects to attract buyers and get rid of remaining stock.More from newsParks and wildlife the new lust-haves post coronavirus20 hours agoNoosa’s best beachfront penthouse is about to hit the market20 hours agoLast year, some units in the The Hudson on the former Albion Flour Mill site were discounted by up to 25 per cent. The Hudson in Albion reduced the prices of some of its units. Photo: Adam Armstrong.BIS Oxford Economics is forecasting a huge 25 per cent drop in high-density dwelling approvals this financial year, but expects the decline to be less pronounced in 2018/19.“The downturn has been heavily driven by apartment construction in Brisbane’s inner-city market,” Mr Mellor said.He said high-density dwelling construction had hit an unsustainable level, surging from around 3000 commencements to around 15,000 at one point. Cranes dot the Brisbane CBD skyline. Picture: Darren England.A MASS apartment fire sale could be set to swamp Brisbane in the next 12 months — allowing would-be first home buyers to finally get a foot on the property ladder. The inner city housing market is in the grip of an apartment glut thanks to a “record boom” in high-density dwelling construction, according to economic forecaster BIS Oxford Economics.But it means now could be the best time to bag a bargain.Managing director Robert Mellor is predicting a frenzy of discounting by developers to take hold for at least another year, with prices for remaining stock in some projects to be slashed by at least 10 per cent to 15 per cent. GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HERE Construction underway in Fortitude Valley and Brisbane City. Picture: Richard Walker.Mr Mellor said developers had since reported a notable drop-off in demand from local and foreign investors, with Queensland “taking a bit hit”.“The good news is first home buyers are taking up some of the slack,” he said.When it comes to house prices, Mr Mellor predicts modest growth of 3 per cent in Brisbane this financial year, followed by another 3 per cent in fiscal 2019.“I’m sorry to tell you you’re not about to see a boom,” he said.There has been a significant shift in demand for home loans in Queensland, with investor loans down 2.5 per cent in the state from their peak two years ago and a 17 per cent increase in demand from first home buyers in that period.last_img read more