Friday, December 25, 2009

Annual Rate of Return for Apartments in Downtown Brisbane

Often, there are statistics that are published that set out the change in the medium house or apartment price. These statistics are often not helpful. For example, if in one quarter there are many low end properties that are sold, and in the next quarter, there are many top end properties sold, the medium price will increase. Similarly, if there are new apartments entering the marketplace, this will most often result in an increase in the medium price for the area. However, in both these cases, you cannot say that values have increased.


I think that it is more useful to track the gains on resale of the same property over time. I have looked at three quality apartment buildings in Brisbane, namely Admiralty Towers, Admiralty Two and Quay West on Alice Street to see what capital gains owners have made. I have looked at all apartments that have been reported as sold this year (2009), and then looked back to see what the owner paid when first purchasing the apartment. In all but one case, the resale was the third or more resale of the same apartment. I have then calculated the Annual Rate of Return, using this calculator. The Rate of Return only looks at capital gains, and does not take into account rent received, expenses paid or transaction costs such as stamp duty or agents fees. Here are the results (with P-Price being the original purchase price on the P-Date; and Sell Price being what that owner received when reselling this year):

Lot P-Price P-Date Sell Price Sell Date A RoR
Admiralty Towers One
5 $282,500 2/08/01 $520,000 25/09/09 7.77%
73 $490,000 19/10/06 $600,000 30/06/09 7.79%
76 $498,000 15/05/03 $685,000 31/08/09 5.19%
92 $510,000 21/03/07 $545,000 7/08/09 2.83%
119 $810,000 1/02/06 $1,200,000 19/03/09 13.36%
Quay West
23 $230,000 6/12/02 $420,000 8/07/09 9.57%
24 $435,000 16/05/08 $450,000 18/04/09 3.74%
49 $256,000 4/11/95 $425,000 25/09/09 3.71%
55 $310,000 10/05/04 $440,000 25/02/09 7.58%
68 $585,000 4/03/05 $675,000 11/10/09 3.15%
99 $400,000 13/08/96 $700,000 25/09/09 4.35%
120 $275,000 28/04/97 $460,000 2/09/09 4.25%
Admiralty Two
20 $445,000 13/09/04 $725,000 11/05/09 11.03%
47 $700,000 29/08/05 $945,000 1/09/09 7.77%
81 $720,000 23/11/07 $725,000 27/03/09 0.51%
94 $615,000 19/12/06 $730,000 7/05/09 7.45%
97 $340,000 20/02/98 $780,000 12/06/09 7.61%
106 $490,000 15/11/04 $750,000 24/06/09 9.67%
107 $485,000 1/02/02 $990,000 15/08/09 9.92%
124 $615,000 13/04/07 $750,000 19/10/09 8.20%
137 $432,000 22/03/97 $815,000 15/07/09 5.28%

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