"Inner Brisbane is entering its highest ever level of new residential construction," he said. "Construction activity can still lag by 18 to 24 months, so with a sales peak in June we still have 18 to 24 months of very heavy construction activity to come."

The boom – even if most apartments have been sold before construction – raises the issue of who will live in them.

Inner-city living is still a bit of a novelty for a lot of Brisbane residents, who grew up in suburban sprawl, but with two or three bedroom homes still affordable within 10 kilometres of the central business district it may not be enough to force them to sell up for apartment living.

"That still has to play out," Mr Aikman said. "With record sales and record construction, this is an unknown element for a place like Brisbane about who is going to occupy all these apartments.

"I think there will be an element of price competition in rents and it will be interesting to see whether others come into the market who previously haven't done so before."

Inner-city slums

Brisbane City Council is offering big discounts on infrastructure charges for developers to build student accommodation in and around the CBD for an influx of foreign students, with fears of inner-city "slums" that could hurt property values.

CoreLogic RP Data senior research analyst Cameron Kusher said fears of Brisbane's peaking apartment market were justified.


He said there were more than 18,300 units approved for construction in Brisbane in the 12 months to September – an increase of almost 50 per cent.

"We've seen a massive surge in apartments for the past few years and there are now more high-rises than we've ever seen before," Mr Kusher said.

"But probably what the concern is now is who is exactly going to buy them? Rental growth in Brisbane is pretty non-existent at the moment and you've got all this extra supply coming on."

Brisbane apartments remain a good value proposition for southern investors, compared with Sydney and Melbourne, according to CoreLogic RP Data.

The median price for Brisbane units is $398,000, well below Sydney's $675,000 and Melbourne's $500,000.

Urbis said the median apartment value in the Brisbane local government area was closer to $430,000 – and even higher for brand new apartments – but still much lower than southern capitals. The gap is unlikely to be bridged any time soon, according to Mr Aikman.

Brisbane's gross rental yield in October was 5.3 per cent, compared with 4.1 per cent in Sydney and Melbourne.

With a wave of new apartments coming onto the Brisbane market, Mr Kusher predicts rents will fall next year.

"We wouldn't be surprised to see rents falls in the next 12 months. There are major concerns about how many apartments are being built in Brisbane," he said.

"The next problem will be settlement risk. Some of these people probably went to their bank two or three years ago to borrow money and now it's coming up for settlement and they haven't seen the capital growth or rent they thought they were going to get. And they may have to stump up more cash to get the finance."