Sunday, November 7, 2010

Flats Are Flat

There are head-winds for investors in the Brisbane apartment market:

  • slowing population growth
  • foreign investors selling, because they profit from the high Aussie dollar
  • foreign investors not buying due to the high Aussie dollar
  • less foreign students, so less renters
  • higher interest rates

Recent articles set out some of these concerns....

"QIC chief executive Doug McTaggart has painted a grim picture of the residential market in South East Queensland. ... "Population growth in Queensland is suffering." ... Herron Todd White estimated there had been a 30 per cent drop in volumes from 2008. ... vacancy rates are trending up at the moment ... the current Brisbane market is showing some oversupply... " Australian Financial Review, 4 November 2010, page 60

"Overseas students and retirees are fuelling population growth in Brisbane's inner city, with nearly 13,000 people now calling the CBD home. While Brisbane's fastest-growing suburbs are in the city's east and south, the growth of inner-city living is the perhaps the most visible change.

"A lot of the accommodation now is just built for students and they have just small kitchens," Ms McLean said. She said five of the unit buildings in Brisbane's CBD were mostly student accommodation.

"Some of them where the students are living are turning into ghettos," Ms McLean said.

"Down Albert Street, Mary Street, at the Parklands (apartments) there at Roma Street," she said.

Source: CBD bulges as more move in

Units in Brisbane are among the cheapest in the country as property prices in the city continue to slide, according to analysts.

The Australian Property Monitors September House Price Report, released today, shows the median unit price in Brisbane fell 2.8 per cent from $366,533 to $356,352 in the last quarter.

Source: Brisbane unit prices on the slide

Brisbane's property market woes look set to continue for the forseeable future due a slump in migration and an oversupply in the market.

Analysts have tipped prices to remain stagnant or dip further at least until the middle of next year. ...

Property analyst Michael Matusik has long refuted claims of an undersupply in the owner-occupier and rental markets.

"Queensland's population growth is slowing - and significantly," he said. The state's net migration in 2008 was 84,275 people, with 21,228 arriving from interstate.

At the end of March this year, net migration fell to 55,845, with just 11,012 people coming from interstate.

"Our preliminary estimates suggest that more people are leaving Queensland now than arriving from interstate [due to the state economic downturn]," Mr Matusik said. Of the rental market he said: "The amount of vacant stock available is not only greater than most realise, but it is getting larger."

Mr Matusik said about 13,500 new rental properties were required to house 35,000 new residents to Queensland last year.

"Yet, 33,000 new rental digs became available - or over twice as many as was needed," he said. "This is not how I would define 'undersupply'."

Source: Property price slump

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