Wednesday, July 29, 2009

Brisbane School Districts

When purchasing in Brisbane, it is good to know the school catchment areas. As time goes on, more schools will be subject to a school management plan. Thus, like the USA, property values will be impacted depending on whether the apartment or house you buy is in a good or average school area. Each school has a defined catchment area. The map shows the catchment area for Indooroopilly State High, which is gaining reputation as the best high school in Brisbane -- click on the map to see a larger version.

Western Suburbs

From a Ray White Toowong newsletter:

"An interesting trend in the market has continued to grow over the last couple of weeks. There is a strong number of property sales in the $400,000 to $600,000 range. Predominantly these are apartments in the areas of Auchenflower, Toowong, Indooroopilly, St Lucia and Taringa. The majority of these sales have been made to investors looking for a safe stable place to invest their money. Many of these buyers have bought through their Super Funds..."

Australian Housing is Expensive

What do you get for $700,000 in a prime U.S. area?
Are we being ripped off in Australia? Have a look at this house for sale in Delaware, for less than $700,000.

CPI v Interest Rates Graph

See Graph here.

Tuesday, July 28, 2009

The Wave, West End

A Korean developer called Mirae Queensland Pty Ltd is in the final steps of obtaining development approval for an apartment complex at West End, just behind Stockland's Koko project. The development is called "The Wave" and is located at 321 Montague Street, West End.

It is an 8 storey development, proposed to have 424 apartments. There are a large number of studios and one bed apartments. In total, there are 563 bedrooms in the development. There are over 500 car parks. So this development will have a large number of apartments.

There will also be some retail in the development.

There have been a significant number of objections filed to the Development Application, so it is not certain whether or when this will go ahead.

Meriton Brisbane Update

Tennyson Reach Price Drop

Gold Coast Penthouses

From a Colliers email:

"Since early March, six penthouses have reportedly sold across the Gold Coast, from beachside Burleigh Heads to waterfront Hollywell in the north, for a combined total of almost $20 million.

The sales included the penthouse at Ivory in Burleigh Heads which sold for $4.185 million, Ultra in Broadbeach which was secured off the plan for between $3 million and $3.5 million, Pintari and The Inlet in Main Beach, both snapped up for $3.4 million, and Allisee in Hollywell for $2.6 million.

The City’s latest penthouse sale was in Chevron Renaissance’s spectacular Skyline Tower. It sold earlier this month to a local resident for $2.95 million in a deal negotiated by Colliers International Gold Coast’s Director - Prestige Property, John Natoli.

There has been a surprising number of penthouse sales on the Gold Coast in the last four months as vendors were meeting the market on price, driven by the global financial markets, and buyers were quick to act to secure solid investment opportunities – in this case prime residential property."

Saturday, July 25, 2009

Google Real Estate Search and other links

Google Australia Real Estate Search and video

Sold Magazine for real estate agents
Property Portal Watch
Australian Property Investor
Investment Property Blog

Terry Ryder's View

A classic of this genre was excreted recently by the UDIA. The institute called it "an unprecedented overview" of the home-building industry in Queensland. It warned of "massive job losses" as well as an undersupply of housing and lost revenue. It blamed all the usual suspects: restricted land supply, excessive infrastructure charges and inefficient planning systems.

The UDIA called it "an alarming snapshot". I found it alarming too -- I was alarmed at how shallow and shameless this mission was as an exercise in self-serving propaganda.

It was strangely at odds with other reports from more objective sources. Colliers International residential managing director Grant Dearlove says in a recent report: "Over the past 18 months developers had moved away from apartments but they are coming back big time. Right across the country our residential directors have been inundated with requests from developers to work up new residential offerings."

Source: The Australian

Scared buyers put apartments on top

Will units continue to be a more affordable option? Not unless it becomes easier to build them. Analyst Michael Matusik says multi-unit building approvals fell 44 per cent in May and, while the data is volatile, medium-density dwelling starts are on "a serious slide south". This is despite lower interest rates, the economic stimulus and rising investor interest.

Matusik says high prices and restrictive buyer and developer finance are the limiting factors. A new apartment in a downtown city area (Matusik lives in Queensland) costs the buyer at least $8000 a square metre, putting the cost of a 69sqm two-bedroom apartment with one parking space at $550,000.

Investors buy close to 75 per cent of all new apartments, but they now need bigger deposits to do so. Twenty per cent is often the minimum and sometimes 25per cent to 30 per cent.

Growth in rents is also slowing and Matusik says he can't see investors rushing back into the new apartment market. He says most new units sold recently have been substantially discounted, often below replacement cost.

Some are also not that new in the sense they have been on the market for a long time.

Second and third-tier financiers are out of the market, so there has been a dramatic reduction in the amount of development finance available.

"Just 12 months ago, banks would lend on an LVR (loan to valuation ratio) of 80 per cent. Today they are asking 60 (per cent) to 70 per cent," Matusik says. Deposits must be in cash and developers are often asked to provide a profile on each buyer. "Even cashed-up quality developers can't make most of their new projects work under these conditions, and God help you if you need to roll over funds."

Matusik says there are no quick fixes and new apartment construction will be "sluggish at best" for the foreseeable future and even "dead in the water" unless the banks free up finance for such projects. The effect on supply and affordability should be obvious a few years down the track.

The Australian

It Seems that St George Doesn't Want Prices to Fall

This is what St George Bank (part of Westpac) says about housing prices..
"There are a number of key reasons why we are optimistic on house prices. These include low mortgage rates, the first-home buyers’ grant, relatively low vacancy rates and the sharp improvement in housing affordability. But there are also the important demographic fundamentals that should facilitate a lift in house prices over the medium term. These demographics include strong population growth. Population growth has accelerated to be at its highest level in 40 years. It is running at this pace at a time when there’s a national shortage of housing and when increasing housing construction is being restrained by difficulty in accessing funding and uncertainty about the economic and financial outlook. This shortage is set to get bigger over the next few years. This imbalance between demand and supply means prices should stabilise later this year and early next year, before price pressures emerge and gradually intensify over the next few years. In the short term, further falls in house prices are still likely. Most recent house price measures are still showing declines. These are most pronounced at the top end of the market."

Short term fall, long term rise.

Unbelievable Pricing

There have been a number of stories published recently about price drops for top end properties, where vendors sold for less than for what they paid. If it is a first resale of an apartment (or a new house in a development), the vendor may not have actually paid what the government records say, and may not have actually suffered a loss.

For new apartments, the original off-the-plan purchaser is sometimes given an incentive from the developer. The developer does not want to drop the sales price, because the developer wants to be able to report to past and future buyers that the prices are steady or going up -- when if fact they are not. So the sales price is written on the contract and reported to the Dept of Natural Resources as the sales price, but in fact the buyer is actually paying less.

This is clearly illegal. (Read this legal decision, paragraphs 14 and 15, if you do not agree.) The developer, purchaser, real estate agent and solicitors involved are all breaking the law doing this.

Sometimes the rebate is given as a straight cash refund at settlement. For example, here is text from a "contract instruction sheet" prepared by a Juniper agent for an apartment sale in Queensland, giving instructions to the lawyer to prepare the contract of sale (the purchaser did not end up going ahead):

"The Purchaser to receive a rebate of $500,000 at settlement of Contract"

Another way to do a similar thing is by way of a rental guarantee. I was offered a rental guarantee on an apartment, and was told that money could be paid to be as a cash payment at settlement to cancel the rental guarantee.

A third way to do this (and it is not clear whether this is illegal or not -- but it is dubious) is where the developer pays rates, body corporate or adds a furniture package "for free". For example, I have seen apartments offered for sale at $515,000 with the developer paying body corporate and rates for two years. The contract price will show $515,000, and assuming that rates and body corporate are $5,000 a year, then the purchaser is in effect only paying $505,000. But the records will show the sale as being $515,000.

So take care when buying from the first owner of an apartment or spec house -- the price in the records may not actually be the price that was paid by that owner.

Sunday, July 19, 2009


"Meanwhile, one of the apartment sector's great survivors, Meriton boss Harry Triguboff, is on the look out for a third Brisbane apartment site as the Sydney-based billionaire considers shifting more of his development north.

"When we came to Brisbane, we couldn't sell at all," he said. "But I believed what I had to offer was what the market wants." Mr Triguboff said he had been helped by the fact that other Brisbane CBD apartment projects had been shelved.

The Australian

"And so while Triguboff might be making money in the short term, he knows that long term if NSW keeps shooting itself in the foot, the population will leave for the greener pastures of Victoria and Queensland where they can buy a house or apartment for a fraction of the Sydney price."

Business Spectator


"Meanwhile recent investor confidence has buoyed Brisbane's luxury apartment market, according to analysts."

"Development group Pradella has sold 73 per cent of the 54 apartments off the plan at West End development Waters Edge."

Brisbane Times

"However, the forces affecting Brisbane are similar to Melbourne but the Gold Coast has an apartment oversupply. Both Melbourne and Brisbane are feeding on the fact that Sydney dwellings are just too expensive and the shortage is making the situation worse."

Business Spectator

Port Douglas

Top End Not Looking Good

"Discounting by more than 20 per cent is commonplace for some top Gold Coast addresses and many houses and apartments are yet to sell. A property owned by the bankrupt entrepreneur Matthew Perrin sold on Albatross Avenue, in Mermaid Beach, in May for $2.75m after it was purchased for $4.375m in October 2005.

Former Sydney Swans footballer and founder of tourism group Breakfree, Tony Smith, sold his Hedges Avenue house at Mermaid Beach for $28m to IT entrepreneur Daniel Tzvetkoff - less than half the expected $60m. Now the half-finished mansion Mr Tzvetkoff purchased is to be sold after his company BT Projects was placed in administration.

Other prestige properties around the country are set to sell at sharp discounts, with many vendors shaving millions of dollars off the asking price."

See The Australian, photos and chart
The chart shows that people lost money in New Farm, Coronation Drive, Paddington, Hamilton, Hastings Street in Noosa and the Gold Coast.

"The sort of prices that were being paid were not sustainable and now we are back at 2001 and 2002 prices," Mr Fatouros said. He estimated prestige home prices have fallen about 25 per cent from their peak, with another a decrease of 10 per cent to go.

"I don't think we have seen the bottom yet," he said.

But one Gold Coast agent, who declined to be named, said there were more mortgagee sales to come. "The banks don't want to flood the market with pressured sales and are hoping for some recovery in prices," he said.

"They are drip-feeding properties on to the market."

The Australian

Mixed Use Buildings

This legal decision, concerning Admiralty Towers, highlights a problem that often arises in mixed use buildings. Admiralty Towers had a cafe on the ground floor associated with the onsite manager (and Open House Realty), that has been vacant for some time. At present, the by-laws do not allow cooking in the cafe.
Many new apartment buildings have mixed uses, that often raise disputes between residential tenants and other (usually commercial) tenants.

Sales in Brisbane City

Admiralty Towers One - 3 bed, 2 bath, 2 car, 148 sqm, level 19, sold in March 2009 for $1,200,000

Admiralty Towers Two - 2 bed, 2 bath, 1 car, 106 sqm, level 14 - sold in March 2009 for $725,000

Quay West - 1 bedroom, 1 bath, 1 car - 75sqm, level 4 - sold in April 2009 for $450,000

Riparian - 2 bed, 2 bath, level 41 - sold at auction for $1,400,000

Grosvenor - 3 bedrooms sold at auction for $1,535,000 on 3 July

Colliers Opinion about Brisbane

"Although Brisbane is at the bottom of the property clock, Colliers International believes still booming population growth will drive a market in which developers try to meet residential product demand. On that basis, the agency considers it a good time for investors in the Brisbane market. It also believes the residential sector will lead a wider property recovery, as it did during the 1990s recession.

The report concludes that Australia seems to be escaping the worst of the global financial crisis. 'In a time of rising unemployment, it's a big call to say the housing market is past six o'clock, but talking to real buyers sums up a mood hope, Dearlove added.

Source: PropertyWire

Price Drop at Parklands Sherwood

Pradella has decreased the list price for apartments at Sherwood. In my opinion, the city view apartments are great -- but there are few of these left. It is a very good development. Two apartment buildings are complete. There are 3 more apartment buildings that are planned (construction not commenced).

Apt 201 - 2 bed - rear view - ground floor - decreased to $509,000
Apt 203 - small 2 bed - rear view - ground floor - decreased to $485,000
Apt 204 - 1 bed - rear view - ground floor - decreased to $379,000
Apt 205 - large 2 bed - rear & side view - ground floor - decreased to $549,000
Apt 206 - large 2 bed - city view - ground floor - decreased to $559,000
Apt 213 - 3 bed - city view - ground floor - decreased to $690,000
Apt 214 - 3 bed - city view - ground floor - decreased to $699,000
Apt 216 - 1 bed - rear view - ground floor - decreased to $379,000
Apt 221 - small 2 bed - rear view - 1st floor - decreased to $495,000
Apt 222 - 1 bed - rear view - 1st floor - decreased to $385,000
Apt 223 - large 2 bed - rear & side view - 1st floor - decreased to $559,000
Apt 225 - small 2 bed - city view - 1st floor - decreased to $515,000
Apt 231 - 3 bed - city view - 1st floor - decreased to $699,000
Apt 240 - 1 bed - rear view - 2nd floor - decreased to $395,000
Apt 241 - large 2 bed - rear & side view - 2nd floor - decreased to $569,000
Apt 243 - small 2 bed - city view - 2bd floor - decreased to $525,000
Apt 250 - 3 bed - city view - 2nd floor - decreased to $719,000
Apt 251 - large 2 bed - rear & side view - 2nd floor - decreased to $575,000