This Blog is designed to provide information about buying or renting apartments in Brisbane, Australia.
Saturday, January 23, 2010
Will Brisbane Apartment Prices Rise or Fall in 2010?
I do not know! The messages are mixed at present. My predication is that some buildings will have average price growth, while other buildings (e.g., those with a large number and % of investor apartments -- e.g. Aurora and Charlotte Towers -- or those that were aggressively sold off the plan during the boom -- e.g. Evolution) will have no price growth or price decreases.
Factors suggesting price increases for Brisbane apartments include:
increased migration to Brisbane
mining sector likely to remain strong
few large new apartment buildings being completed in the next 18 months
net returns of 5% or better for some apartments
Factors suggesting no price increases (or possible price decreases) for Brisbane apartments include:
likely interest rate increases in 2010
rents unlikely to increase significantly in 2010, and may even decrease for some buildings/areas
lack of first home buyers, many of whom purchase apartments
investors only purchasing when the price is right or the seller is desperate
difficulties for investors getting loans
banks are requiring a higher % of down payment, so investors have less to spend
valuations are more conservative, making it harder for investors to obtain highly geared loans
difficulties redrawing against existing loans to invest, because property prices have not increased significantly in recent times
Risks for the investor in Brisbane include:
foreign students loosing interest in Brisbane or Australia -- as they make up a significant percentage of renters
wages stagnate -- affordability (% of wages spent on property) already stretched, so unless wages increase, it is unlikely that property prices will increase significantly
council rates increasing
body corporate levies are already high (over $6,000 a year in some buildings), and may increase more this year
federal government limiting or removing ability to negatively gear or claim depreciation