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
• unemployment increases