Saturday, March 31, 2012

Another Victory For the Dog

Body Corporate for River City Apartments CTS 31622 v McGarvey [2012] QCATA 47 (12 March 2012)
"The relevant context, in my opinion, is simply that there may be a number of types of scheme, in which owners and occupiers may have a number of different objectives and uses for their lots, and the very nature of any community titles scheme requires that relationships between owners and occupiers must be regulated in some discernible fashion, and by reference to reasonable criteria unless otherwise specifically provided.

So where does this leave a by-law such as by-law 13, which purports to prohibit altogether the keeping of animals on a lot?

In McKenzie, the by-law in question did not prohibit the keeping of pets, but only the keeping of certain types of pets. Therefore, I concluded, it did purport to regulate, rather than to prohibit, a use of lots in the scheme – namely, the keeping of pets.

In prohibiting the keeping of pets altogether, the by-law in this case is analogous to a by-law that prohibited altogether a particular manner of using or enjoying a lot by carrying out building works. In Mineralogy, the Court of Appeal expressed the view that such a by-law would be invalid. Similarly, a by-law that prohibited altogether the playing of music in a lot would be invalid, whereas one that prohibited playing music above a certain level of sound between certain hours would be one regulating the use and enjoyment of lots.

In my view, a by-law that prohibits altogether the keeping of pets in lots is not a by-law regulating the use or enjoyment of lots, but purports to prohibit a particular use and type of enjoyment altogether. It therefore goes beyond the scope of a valid by-law permitted by s 169 and is invalid."

Friday, March 30, 2012

AFR: Qld Property Due for Kick Start

Extract from Story in the AFR:

For years now, much of Queensland has been a home-grown testament to how property booms can go dreadfully wrong. But a select few see the parlous state of the Queensland housing market as a rare opportunity to pick up homes with great growth prospects at bargain prices. Many see the landslide election of the LNP government as a key catalyst.

Earlier in March, private equity firm Engage Capital bought 19 luxury apartments from the Bank of Scotland in The Macrossan tower in central Brisbane, developed by Macquarie Group. Engage Capital director Ben Grootemaat says he paid about $1 million less for each apartment than off-the-plan prices. He thinks Brisbane values have bottomed and he plans to sell the homes straight away, claiming there is strong demand for the right kinds of apartment at the right price. “There is a lot of demand, especially for three-bedroom residences,” he says. “We have a strong level of interest.”

He’s not the only one positive about the sunshine state. Veteran developers Ken Woodley and David Devine founded apartment developer Metro in March 2010. Since then they have bought or are in the process of buying 2500 apartments in inner-city Brisbane. Woodley says the company sold more than 450 apartments last year, and hopes for a similar result this year. The drivers he is banking on are a tight rental market and the influx of resources employees.

“Because of the huge influx from the resources companies in the office towers, I think what is going to happen within six months is people will have to pay three months’ to six months’ rent in advance to secure an apartment,” Woodley says. “There really aren’t many being built.” But he’s also hoping a confidence boost will come with the reforms new Premier Campbell Newman has promised to deliver in his first 100 days in office. One is stamp duty exemptions for the principal place of residence, which may become law on July 1, costing the government $900 million.

Combined with more interest rate cuts that most banks are still expecting, housing will become more affordable. “I would think those two things would kick start the market,” Woodley says.

The value of houses in Brisbane fell 7.6 per cent in the 12 months to the end of February, according to RP Data Rismark, the worst decline in any mainland capital. The fall in values and dearth of credit have caused a plunge in building. Mirvac research figures show per capita housing levels in Queensland have plunged to their lowest levels since about 2002. But Hoke Slaughter, Morgan Stanley head of real estate investing in Asia, believes the supply-demand picture in Queensland will be “quite attractive” when the market finally recovers. And there are certainly some bargain prices on offer.

Queensland has been littered with receivership sales. Receivers KordaMentha predicted last month there would be an increase in the volume of distressed assets put to market in the state this year as financial institutions attempted to clean up their loan books. Savills agent Greg Harris is selling new townhouses on the Gold Coast that were once priced at $635,000 for about $500,000. He says although prices have fallen 30 per cent, rents haven’t.

Australian Property Monitors senior economist Andrew Wilson says some “green shoots” are emerging in Brisbane. Home values fell 1 per cent in the three months to February, according to his figures, a slower rate of decline than last year. There were other early signs of improvement, such as an increase in home loans and positive feelings about the new government, which may improve buyer sentiment. “The whisper around is we’re just starting to get some early cycle momentum in that Brisbane market,” Wilson says. “With the election behind them, there is always a honeymoon period for the market, which can lead to a more positive attitude.”

Monday, March 26, 2012

Evolution Sales - Massive Losses for Investors

I have written in the past about Evolution, and how Citimark sold these apartments off-the-plan at high prices.  It is not the greatest quality building in my opinion.  Most of the original buyers from Citimark were Korean.  Evolution opened in 2008.  Here is some recent sales evidence:
  • Apt 245, sold off the plan in 2006 for $767,500.  Resold in November 2011 fully furnished for $605,000.
  • Apt 184, sold off the plan in 2006 for $660,500.  Resold in November 2011 for $460,000.
  • Apt 153, sold off the plan in 2009 for $570,000.  Resold in October 2011 for $410,000.
  • Apt 276, sold off the plan in 2006 for $701,000.  Resold in September 2011 for $620,000.
  • Apt 163, sold off the plan in 2007 for $649,500.  Resold in September 2011 for $435,000.
  • Apt 194 sold off the plan in 2006 for $512,720.  It is currently listed for sale for $510,000.  Based on the above, it will be lucky to be sold for above $460,000.
This shows massive capital losses for each of these buyers.  Take care when buying from developers off the plan.  Take extra care if buying from Citimark!

Ray White Auction Results

I went to the Ray White auction yesterday.  Some results concerning apartments:
  • Apt 2804 Charlotte Towers, 1 bed, 1 bath, no car - sold prior to auction
  • Apt 2808 Charlotte Towers, 2 bed, 2 bath, 1 car - sold for $510,000.
  • Apt 3409, Festival Towers, 2 bed, 2 bath, 1 car - passed in at $480,000.
  • Apt 287, River Place, 2 bed, 2 bath, 1 car - unsold, inspect now!

Saturday, March 24, 2012

My reflections on the inner Brisbane apartment market

Here are my thoughts based on my non-scientific observations:

  • Most of the apartments sold in inner-Brisbane in the past year have been one bedroom apartments.
  • Thus, the medium price will be lower, because the kind of apartments selling are the smaller, cheaper apartments.
  • However, many apartments are being sold below the previous sale price for that same apartment.
  • In a number of buildings, the prices being achieved for apartments are equivalent to prices in 2007.
  • Two bedroom apartments above $600,000 are not selling.  If they do sell, the contract often crashes.
  • In some quality buildings, prices have not deceased, but there have been few sales.
  • Vendors are discounting if they need to sell.
  • Rents are increasing, but so are body corporate fees.
  • Apartments being sold off-the-plan are being sold at prices that well exceed the price of similar existing apartments.
A sample of sales from a Ray White report is set out below.  (Double click on image to see larger version.)

RP Data Capital Market Report

RP Data's recent Capital Market Report 2012 had the following information regarding Brisbane:

  • Brisbane's capital gains have been well below the combined capital city average since 2009.
  • Compared to Brisbane's long-term and medium term gains, the last 12 months has recorded an extremely weak performance.
  • Brisbane sales volumes are currently at their lowest levels since 1996.
  • Average discount levels across the city current sit at 8.8% for apartments (compared to 2010, when it was 7.4%).
  • Apartments in Brisbane are currently taking an average of 72 days to sell (compared to 55 days to sell for the 12 months prior).
  • For the apartments sold in 2011, the average hold time was 7 years.

Friday, March 23, 2012

Another Milton Development

Walker Corporation announced it had bought land in Brisbane's inner west to embark on a new a $100 million-plus development with shops and 243 apartments across two towers, 12- and 20-storeys high.

Walker Corp has bought for a new mixed-use project at Milton in Brisbane was sold by Mominvest C, a company owned by Sydney-based John Hayson. The 3240sq m property fronting Milton Railway Station on Railway Terrace is an amalgamation of eight housing lots, with development approval for 243 apartments and shops.

Walker Corp plans to build one- and two-bedroom apartments priced between $420,000 and $550,000 within the traditionally industrial and low-density residential area where the Lion Nathan Brewery is also located. "Our project will provide high-quality, yet affordable accommodation for young people, who want to live less than 2km from the CBD," Mr Walker said.

The purchase is diagonally opposite FKP's The Milton project (at one time called Union).  According to the AFR yesterday, The Milton is close to 50% pre-committed (whatever that means).  It will be interesting to see if the Walker buildings block the views from The Milton.

See The Australian and AFR

The risk of falling prices

Financial comparison website RateCity CEO Damian Smith said borrowers who have taken on a home loan with a small deposit are most at risk from the impact of falling prices.

For example, if a property was purchased for $400,000 with a 5 per cent deposit, but then that house price fell by 10 per cent, instead of having $20,000 of equity value in the property, there would be none at all.

"If you try to refinance in those circumstances, you will find yourself owing more than the property is worth - a mortgage of $380,000 as against property value of just $360,000," Mr Smith said.

Average Australian capital city property values fell by 3.6 per cent in 2011, according to the latest RP Data-Rismark Home Value Index. For a $400,000 home, that decline translates to a new value of $385,600. Property values declined in every capital city with Brisbane experiencing the biggest fall of 6.8 per cent. Full story here

Thursday, March 22, 2012

Where will the next Apple Store be in Brisbane?

An Apple Store was tipped for Macarthur Chambers on Queen Street, but it has not arrived.  A story in Brisbane Times suggests it has been delayed due to a contractor going bust.

Laing O'Rourke reports that it has signed up a two level Apple store at its McLachlan & Ann (M&A) building in the Valley.  See Press Release.

The Apple Press Release website had no news last time I looked, but the Apple job website says that there will be a new store in Brisbane.

I suspect it will be a positive influence to have an Apple Store nearby.

Negative Equity

The share of homes with mortgages worth more than the property's value increased at the end of last year as the housing market stalled and prices turned lower. The rise suggests an increase in negative equity, where a mortgage can be worth more than the value of a house. Property information group RP Data said that 6.4 per cent of homes were valued at less than their purchase price in the December 2011 quarter, rising from 4.9 per cent of the market in the September quarter. By city, Brisbane fared the worst with 9.2 per cent of property deemed to be "underwater" in financial terms, followed by fellow mining state capital Perth at 7.4 per cent.
See Brisbane Times, Smart Company and Business Spectator

Newstead Riverpark

"Developers FKP and Mirvac are major players in the quest to turn 17ha of prime riverfront land into a vibrant new community.  Located only 2km from Brisbane CBD, the Newstead Riverpark urban renewal precinct will become a residential hub, dining and entertainment venue, shopping destination and employment district."
Full story here.

Monday, March 19, 2012

Low rise or high rise apartment?

"First-time property investors buying off the plan should consider low-rise apartments over high-rise units, according to developers and market analysts."
See Property Observer

Tuesday, March 13, 2012

Real Estate Agent Blog

Here is an interesting blog designed for real estate agents, to help them obtain listings and sell property.  If you are selling or buying, it is good to read about what real estate agents are doing or should be doing.

Sunday, March 11, 2012

Number of Dwellings Sold in Brisbane

In Brisbane, in 2003, over 73,000 dwellings were sold.  In 2007, over 69,000 dwellings were sold in Brisbane.  However, in 2011, only 34,300 dwellings changed hands.

This was the lowest number of properties sold in any year in Brisbane in the past decade.

RP Data says:
"Clearly 2011 was a very weak year for housing transactions. The higher interest rate environment throughout much of the year and the general conservative nature of consumers were likely to be the biggest influences on such a low volume of sales. We are anticipating transaction volumes will pick up over 2012 due to slightly more favourable conditions."

See Article from RP Data

Saturday, March 10, 2012

Vine on Russell Prices

Vine on Russell was recently released by Aria Property Group.  It is located in South Brisbane, opposite Musgrave Park.  Construction to start in June and to be completed in mid 2013.

As at the end of the first week in March, after about 3 weeks of sales activity, 50 of the 56 apartments were reported as being sold by the developer.  This is a fantastic result, or the developer is not being truthful, take your pick.

Some pricing for the apartments that remain for sale:

  • Apt 702, a studio apartment, 55 sqm internal, $446,000
  • Apt 303, a two bedroom apartment on the corner of the building, overlooking Cordelia St (which is a major road, and noisy), 73 sqm internal, $609,000
  • Apt 705, two bedroom on Cordelia St, 75 sqm internal, $614,000
Looking at current sales of quality apartments in the inner city apartments, and what is currently listed for sale, these prices seem to me to be outrageously high for small apartments with few facilities that are located on a major road.  Obviously, 50 purchasers don't think so.

Who is buying and what are they buying?

From the newsletter from an agent that specialises in mid-priced inner city Brisbane apartments:

Usually buyers are hot-off-the-mark in January, however this year we’ve seen buyer interest only gradually increase in January with a marked jump in February. This also translated into sales and is a positive indication of the year to come. In fact, we recorded more buyers signing contracts than in any other month over the last two years.

What are people buying? The trend to properties up to $500,000 continues within the CBD. Although there is and always will be certain demand for top-end properties, $500,000 seems to be the upper limit for the majority of buyers, particularly investors, at present. One bed units were the ‘property of choice’ in February, probably due to their perceived more affordable price.

Who is buying? Both owner occupiers and investors were busy in February. Currently, the tightening CBD rental market is directing some tenants into property ownership as the most viable alternative. This is not only true for young professionals, but also for overseas students not able to find CBD rental accommodation. On the investor front, we recorded significant interest from overseas buyers, particular from China.

Friday, March 9, 2012

Apartment Prices Strengthen says REIQ

From an REIQ Press Release issued today:

The Queensland unit and townhouse market is showing healthy signs of recovery with many areas across the State posting median prices increases over the December quarter, according to the Real Estate Institute of Queensland (REIQ).

The REIQ quarterly Queensland Market Monitor, which tracks median property prices and rents across the State, found that prices in the fourth quarter of last year rebounded in most areas of South East Queensland.

"What we are starting to see is that as 2011 progressed, so did confidence levels in our property market with prices beginning to strengthen," REIQ CEO Anton Kardash said. "Many regions posted their most robust price results this quarter since prior to the natural disasters at the beginning of last year. As we move into 2012, REIQ accredited agencies are reporting healthier levels of enquiry with first home buyers and investors especially taking a keen interest in the more affordable unit and townhouse market."

According to, there are more than 5,000 listings for Queensland units and townhouses currently for sale under $350,000. The median unit and townhouse price in Brisbane increased 2 per cent to an even $400,000 over the December quarter. On the Gold Coast, it increased 5.3 per cent to $350,000 and was up 2.1 per cent to $245,000 in Toowoomba.

See similar story here.

Tuesday, March 6, 2012

Photomontages Misleading

"Up to 90 per cent of photomontages produced for development applications could be misleading, architects and planners say.  An architect and planner at Dickson Rothschild and visiting professor at the University of NSW, Nigel Dickson, said such images should be verified independently."
See Domain.
I think a similar point could be made about computer generated renderings for off-the-plan sales brochures.

Monday, March 5, 2012

Vine on Russell, at South Brisbane

Another apartment building from Aria in South Brisbane:  Vine on Russell, which is on the corner of Russell Street and Cordelia Street (a busy main road), overlooking Musgrave Park.

An 8 storey building, with at total of 56 apartments, either 1 or 2 bedroom apartments.  No pool.

Sunday, March 4, 2012

Campbell Newman and Apartments

Campbell Newman, when at Brisbane City Council, introduced the "parity factor", in relation to rates paid to the Council by Brisbane apartment owners.  Until this time, all rates in Brisbane were calculated based on the unimproved value of the land (regardless of the house or buildings on the land).  Under the "parity factor", apartment owners are now assessed taxes at a high rate than house owners.  In effect, house owners are taxed based on the unimproved value of the land, but for apartment owners, the tax takes into account the improvements on the land.  This doubled or tripled the rates for a number of apartment owners.

For houses, if I build a $2 million house on land worth $400,000, and you build a $250,000 house on the block of land next door also worth $400,000, we both pay the same rates in Brisbane.  But if you build an apartment building with 8 one-bedroom apartments, then the rates over all for those apartments will be higher than for the $2 million house.

I guess Campbell Newman will be looking at ways to increase taxes if he becomes Premier, and I doubt that he will be friendly to apartment owners.

Saturday, March 3, 2012

Portside and Hamilton Harbour

This photo shows how crowded this area of Hamilton will soon become with apartment developments.

Site A has development approval for 87 serviced apartments.  Site B has DA for 127 residential apartments.

Friday, March 2, 2012

Daily House Price Index

RP Data and Rismark have launched a daily house price index for Australian residential property.

"The RP Data-Rismark Daily Home Value Index aims to measure daily movements in the value of Australian housing markets. Rather than relying solely on transacted sale prices to provide a measure of housing market conditions, the RP Data-Rismark Daily Home Value Index is based on a ‘hedonic’ methodology which includes the attributes of properties that are transacting as part of the analysis. Understanding factors such as the number of bedrooms and bathrooms, the land area and the geographic context of the property allows for a much more accurate analysis of the true value of movements across specific housing markets."

RP Data website and The Australian and ASX website and Press Release.  And see this interesting article by Chris Joye, who was involved in developing the index.

For Brisbane apartments, the February monthly index is 380.90, which is down 5% year on year, and up 0.55% month on month.

Looking at the daily index for the past year, for Brisbane apartments, here are some index values:
  • 1 July 2011 - 393.61
  • 1 January 2012 - 391.58
  • 1 February 2012 - 385.43
  • 29 February 2012 - 386.68
Some of the lowest values of the index for Brisbane apartments over the past 12 months are as follows:
  • 19 August 2011 - 385.66
  • 25 January 2012 - 385.14
  • 12 February 2012 - 382.57