Sunday, February 13, 2011

Investing in the Brisbane Property Market?

If you are planning on investing in the Brisbane property market, then take care! This blog focuses on apartments, primarily in inner city Brisbane. Some thoughts:

1. There are less overseas students wanting to rent apartments this year. This trend will continue.

2. There are less investors willing or able to purchase apartments, particularly high end apartments.

3. A number of people in their 50s and 60s, who may have considered purchasing an apartment to live in (downsizing) or as an investment are not buying at present. Either their super funds have less money than they hoped, they are more risk adverse, or banks will not lend. Also, people who were looking at riverfront apartments have paused buying decisions due to the floods.

4. There are a huge number of apartments on the way. At current sales rates, it will take years to sell these apartments. Many are small 1 or 2 bed apartments. Would you want to live in them? See list of apartments currently being built or being sold.

5. Many are predicting no capital growth this year; some a predicting 10% decrease in values, some predicting 35% decrease in values. This makes buyers nervous. Many are waiting. Maybe prices will not go down -- who knows? But there is no urgency in buying, and those who are making offers on investment properties are doing so at a significant discount to the list price. So sellers are not selling, and the number of apartments listed for sale is increasing. The only sellers who are selling are those who are dead, heading for bankruptcy, are bankrupt, are getting divorced or have lost their job. So it is hard to work out what the market price for a property (willing but not desperate seller; willing but not overly keen buyer) is actually doing at present. Maybe if salaries increase and unemployment does not decrease, then prices will go up? I hear that 25 year old storemen and labours in central Queensland are earning $150,000 a year plus overtime -- and are buying investment properties.

6. Rental returns on apartments are average. Interest rates, council rates, water charges and body corporate levies are increasing, thus decreasing net returns. This decreases property values.

7. The Gold Coast is dead dead dead. There are a huge number of unsold apartments in The Oracle. Juniper's Soul is coming up to settlement soon, and smart money is betting that it will end up like The Oracle. Juniper must be sweating. And Gold Coast apartment returns will take a dive, because fewer tourists are coming to the Gold Coast. What does this mean for Brisbane? Bad news about the Gold Coast impacts the mood of investors in Brisbane, and of interstate and international investors thinking about investing in Brisbane.

So not a good time to sell. And probably worth while waiting to buy. But if you listen to the real estate agents, who only make money if you buy, they will tell you otherwise.


Annette Higgins said...

Over 90% of the comments on this site are doom and gloom. I didn't buy my investment apartments at the peak low (certainly not off the plan) but am still making a healthy rental return, particularly given the tax benefits. Far better than a detached housing.

Why cant the Brisbane Apartment site be easier to post a comment. No wonder why there has not been a reply to a blog for more than a year!

Annette Higgins said...

Over 90% of the blogs on Brisbane Apartment are doom and gloom. Whilst I did not buy at the peak low prices(but not off-plan), I am still making descent rental returns. Given the tax benefits, the returns are better than detached houses and most shares.

If you are in a position to make an unconditional offer (e.g. at an auction) there are amazing bargians to be had for investors and owner-occupiers.

And why is the Brisbane Apartment site so hard to post a comment to a blog. I have not seen a comment posted for more than a year. It is time to improve this site.