"Developers are not going to risk spending money on starting a new project – the feasibility is not there because the cost of construction is going up as well as buyer's financing costs."

Prices for development sites have already started to plunge with one developer this week selling a prime apartment development site in South Brisbane at a 35 per cent discount.

RBA concern

The Reserve Bank of Australia has raised concerns about an oversupply of apartments in Brisbane and other cities. So too have analysts at SQM Research, which said there could be an oversupply of 8000 new dwellings – both apartments and house and land products – in greater Brisbane this year compounding concerns about settlements of off-the-plan sales.

However Urbis associate director of property economics and research Paul Riga said that although sales had dropped away in Brisbane there had also been a reduction in supply.

The rate of apartment building in Brisbane is slowing gradually. Robert Shakespeare

"We will continue to see a slowdown in supply," he said. "Once again apartment approvals dropped to 1299 units – the lowest number we have recorded since 2014. It is important that the market continues to self-regulate."

Urbis records that there were less than a third of new apartments launched in the March 2017 quarter (225 units) compared to the previous December 2016 quarter (668 units).


Managing director of diversified property group Tessa, Brendan Tutt, said the forecast reduction in supply was going to be a "good thing".

"It means there will be fewer projects come to market. This is what we wanted. It is an opportunity to push the price of stock up," Mr Tutt said.

Some apartment projects in Brisbane are settling well despite a downward sales trend. Supplied

"There was a chronic under supply five years ago and then the market started to move again."

Despite fewer sales, the weighted average sale price has strengthened in Brisbane but this is largely due to the type of product available.

In the March 2016 quarter the overall weighted average sale price was $595,664 but in the latest quarter the price came in at $670,861 – a difference of almost 13 per cent and the second highest weighted average sale price ever recorded.

There has been some confusion around pricing with some discounts being offered without developer's approval.

As sales volumes slide there is also some risk that investors may back out of deals fearing lower values.

However concerns of defaulting apartment sales may not be not warranted yet with evidence emerging of strong settlement results for newly built apartments in the city.

Pellicano Group's $86 million mixed-use development Trafalgar Lane in Woolloongabba settled all 147-apartments in its project with few issues.