Friday, August 31, 2012

Devine Makes a Killing at Hamilton Harbour

"Devine reported the sales success at Hamilton Harbour as one of the highlights of its financial year as it reported an underlying profit after tax of $11.1 million but a statutory after tax loss of $12.9 million.

Devine says 90% of total apartments in the two Hamilton Harbour towers have now been settled.  Construction of both towers is now complete with a third tower now under construction.  There are 13 apartments available for purchase in tower one and 31 available in tower two.

Devine says the inner-Brisbane market, the focus of more than 40 apartment projects by a variety of developers, is now stable after a “prolonged period of weakness” with successive quarters of good volume sales.

The Hamilton Harbour precinct located between Racecourse Road and the Brisbane River in Hamilton is a joint venture between Devine and Leighton Properties with one-bedroom apartments starting at $425,000.  Devine says price is continuing to drive the majority of sales with 70% of unconditional sales under $550,000.

Devine expects Tower three settlements to commence prior to December 2012 and contribute to current year earnings with almost 70% of this tower contracted."

Extract from Property Observer article

Aria in South Brisbane

Aria has been in the news recently.  Extracts from two stories below.  I think that South Brisbane is a good location, but a number of Aria's apartment buildings are located in non-prime and C-tier locations within South Brisbane.

"THERE are pockets of prosperity to be found in southeast Queensland's property sector despite the recent lacklustre performance of the market. Nestled between two flanks of the winding Brisbane River, medium-rise residential and commercial properties are popping up among the easy-living environs of Southbank, the city's convention centre hub, the Gallery of Modern Art and Griffith University. South Brisbane, just across the Victoria Bridge from Brisbane's central business district, is benefiting from local and state government changes to push it out of its light industrial past and into a trendy and bustling future.

 Aria Property Group has made the area a focal point of its activities, with sales of their medium-rise residential towers in the inner-city area almost completely sold out before the foundations are sunk. Aria Property head of development Chris Mitchell says apartment sales at the company's 65-apartment project, Station 16, have just settled, while construction was under way on two of the company's other residential developments.

"South Brisbane is the focus of the business at the moment because of its location and rental premium over alternative inner-city locations," Mitchell says.  "We did quite an extensive amount of research to make sure what we were trying to deliver would fit the market in terms of quality and price points.  Certainly, the location was a big selling factor."
Aria Property Group has developed its inner-city niche in South Brisbane since arriving on the Queensland property scene almost a decade ago.  The company has a $250 million investment portfolio that includes 63 commercial, retail and industrial sites and tenancies across southeast Queensland. Its future apartment pipeline could be up to 2500 apartments.
Formed in 2003 by developer Tim Forrester - the son of FKP co-founder and long-serving chief executive Rod Forrester - Aria has concentrated on delivering high-end investment product in the region."

Full story in The Australian

See also Brisbane Times:

"The CMC asked Brisbane City Council in June to investigate its role in letting Aria buy the eight square metres of footpath for the Edmonstone Street development.

A Brisbane City Council spokesman said yesterday the council's investigations were completed last month and no evidence of official misconduct by council officers or staff with the former state Department of Resource Management had been found.

Aria's managing director Tim Forrester said the developer had no "short term" plans to go ahead with the Edmonstone Street tower. "We're focused on these more boutique developments," he said. Mr Forrester would not be drawn on the developer's further plans for South Brisbane, but said there was a "chronic" under supply of housing in the suburb "There's such a demand for apartments and as a result we're seeing rents remain incredibly strong," he said. "There's an increasing number of office workers in South Brisbane and that's really pushing up demand on the southern side of the river."

Mr Forrester added young professionals were also showing a preference for boutique apartment buildings on the southern side of the river, over soaring towers in the CBD. He said he was hopeful the council would welcome the proposal for Grey Street, as it came in under the area's 20-storey height limit.   Just two two-bedroom apartments remain for sale in the Artisan development, which is due to be completed in June next year. The remaining apartments are priced at $594,000 and $629,000. The complex features 66 apartments over 10 levels with 37 one-bedroom and 29 two-bedroom residences."

Buy or Rent a Brisbane Apartment?

See RP Data's recent and popular "Buy or Rent" report.  Details on RP Data blog.  The report says that it is better to buy rather than rent an inner city Brisbane apartment.  But this also means that landlords are doing well.

"Regional areas of Queensland have a much greater number of suburbs that are currently cheaper to buy than rent compared to Brisbane. Across the state the stronger performance of the regional markets is reflective of the fact that a majority of Queenslander’s live outside of Brisbane and in particular it highlights the strength of the mining and resources regions across the state.

At a Statistical Division level, the most populous region, Brisbane, shows the greatest number of suburbs that are cheaper to buy than rent across most scenarios. This is reflective of the weak capital growth conditions that have been evident across Brisbane and the fact that rents have continued to increase, whilst home values have not."

Wednesday, August 29, 2012

Project Marketing Techniques

Interesting article about how project marketing companies use online techniques and database collection  strategies to gain sales in off-the-plan developments:  How a development can secure sales

Tuesday, August 28, 2012

West End High Rise

The State Government has allowed 12 storey apartment buildings to be built in West End, against local community interests, and as a reward for loyal property developers.

"The Newman government has cleared the way for 12-storey buildings in the part of West End opposite Toowong by ticking off on changes to the local plan.  Deputy Premier Jeff Seeney yesterday confirmed he had approved the reinstatement of parts of a Brisbane City Council plan that had been blocked by the former Bligh government."  See Brisbane Times

Housing Market Slumpy?

There are many negative stories at present about the housing market.  For example, "Gloom Returns to Housing Market" (but is Queensland the only bright spot?) and "no housing shortage".

Many pundits say employment growth drives property growth, and unemployment causes property prices to fall.  If that is the case, then Brisbane is heading for a property slump, due to massive Queensland government lay-offs.

Talking to taxi drivers and shopkeepers in Brisbane, in a very unscientific survey, it seems that business is very bad, and when good, is patchy.

It will be interesting to see what happens in September.

Sunday, August 26, 2012

FKP's SL8 Monster

FKP developed a project in West End, called SL8, a few years ago.  It is interesting to look at how it has performed.  FKP advertised this as an architect designed building in a good location.  In my opinion, the design was poor, and the location (even though in West End) is not great.

Here are the recent resales of apartments in SL8 (all two bedroom apartments), 8 Musgrave :
  • Apt 146, sold off-the-plan for $545,000 in 2007; resold for $475,500 in May 2012
  • Apt 123, sold off-the-plan for $585,000 in 2008; resold for $449,000 in November 2011
  • Apt 174, sold off-the-plan for $725,000 in 2007; resold for $600,000 in November 2011
  • Apt 144, sold off-the-plan for $765,000 in 2008; resold for $610,000 in October 2011
  • Apt 214, sold by the developer for $520,000 in July 2010; resold for $440,000 in September 2011
Who said you can't loose buying property?  Every purchaser who has resold in SL8 has lost money.  And don't forget, the above does not take into account stamp duties and real estate agent fees.  Most buyers lost more than $100,000 when reselling.  If the buyers borrowed 80% of the purchase price, the buyers would have lost 100% or more of their equity.

Why such massive capital losses?  The property market has clearly gone into negative territory.  But a key factor here in my opinion is that the developer priced the apartments above the market value even in 2007, promoted the development heavily (including website keyword optimisation), and delivered a mediocre product.  (Have a look at the comments regarding this FKP advertorial.)  Take extreme care when buying off the plan!

Metro 21 Sales

A boutique apartment building in Brisbane City is Metro 21, located at 21 Mary Street.  I generally like this building, because it is smaller than most inner city buildings.  It is about 34 floors high, with a maximum of 4 apartments per floor.  There is a pool and gym, and as well, a sky lounge BBQ area on level 26.  Some of the 2 bedroom apartments have 2 ensuites, plus a 3rd guest bathroom, making it a good apartment to share.  The two bedrooms are 84 sqm internal, plus a large balcony.

Recent sales:

Apt 3401, 2 bedrooms, 3 bathrooms, sold in May for $550,000
Apt 1701, 2 bedrooms, 3 baths, sold in March for $492,500
Apt 1003, 1 bedroom, no car, sold in February for $310,000.
Apt 1804, 2 bedrooms, sold in October 2011 for $525,000.

Buy Real Estate or Buy Apple Stock?

Money Watch: Invest in Apple or buy rental property?

Thursday, August 23, 2012

Rental Crash Coming?

I wonder if a rental crash is coming?  From my review of listing portals, there is a build up of property for rent in Brisbane.  Some landlords are reducing rents.  I am not sure if this is seasonal, or part of a trend.  There are less students renting in Brisbane at present, and less consultants doing government work.

A reader sent me this via email:
"Enjoy reading your blog, just wondering if you have noticed the huge rise in listed apartments for rent in Brisbane. The price also seems to have fallen, seen 2b2b1c furnished in Bowen Hills/Kelvin Grove for $520. Casino Towers 2b2b1c for $480 Emporium has gone from 2 apartments available 2 weeks ago, to over a dozen. Not sure you keep stats on these things, but would be interesting if you could post them if you do."

If anyone has any evidence on this topic, please let me know.

The economy is not strong in Brisbane.  Some government departments are doing forced redundancy programs, where 30% of employees and almost 100% of contractors are being let go.  Small business is hurting, with costs increasing and revenue decreasing.  My guess is that the actual inflation rate and unemployment rate is higher than being reported.

Wednesday, August 22, 2012

RP Data Quartley Report - Brisbane

Over the past 12 months, home values in Brisbane have fallen by -2.8 percent for houses and units declined by a greater -5.0 percent, underperforming the ten year average annual growth rates of 7.4 percent and 6.6 percent respectively.

Although the combined capital cities began to record some growth in values post GFC, property market was not able to recover to the same extent as other cities and has recorded limited growth in home values over the past five years.

Over the past decade, Brisbane’s housing market has recorded distinct cycles with annual capital gains recording a historic high in November 2003 and then consolidating over 2004 to 2006.

While Brisbane’s housing market showed some of the highest capital gains of any capital city prior to the GFC, overall Brisbane values have been underperforming post-2007.

Since the beginning of 2009, Brisbane’s property market has been underperforming compared to the combined capital cities.Brisbane has experienced a much stronger housing market performance over the last five and ten years than it has over the past year.

Vendors are currently discounting their initial asking prices at an average rate of -9.1 percent for houses and -8.9 percent for units.  In June 2011, vendor discount rates were recorded at -9.7 percent for houses and -9.1 percent for units.

In June 2012, Brisbane houses and units were typically listed on the market for an average of 69 days and 81 days respectively.  At the same time the previous year, both houses and units took an average of 73 days to sell, highlighting a slight improvement in conditions for house vendors.

Vendors who sold their dwellings over the past year had owned their houses for 9.2 years on average and units for 7.4 years.

Monday, August 20, 2012

Why Investors Favour Apartments

"Nationally, 58% of flats, units and apartments are owned by investors. That is quite an amazing statistic, especially when you compare that detached houses only 21% are investor-owned."
See Tim Lawless article.

Strange Stories Re Ray White Paddington

Have a look at King Con post and also Stalker story.  Very strange!

Sunday, August 19, 2012


A nice video fly-through for the planned Belise apartment complex at St Paul's Terrace in the Valley has been made available.  See here.  Also, more information here.  Belise is 21 levels, and has a 228 apartments, a mixture of 1, 2 and 3 bedroom apartments.  Two bedroom, two bathroom advertised from $550,000.

Few Optimistic Words From Real Estate Lobby Group

From an REIQ media statement, issued last night:

"Queensland home buyers retreated from the property market in the June quarter as they waited for the return of stamp duty concessions but house prices held their ground, according to the latest Real Estate Institute of Queensland (REIQ) data.The REIQ June quarter median house price report, released today, shows house prices remaining steady in the face of lower sales activity across the State. REIQ CEO Anton Kardash said there was a noticeable slow-down in activity from May to June."

REIQ is the lobby group for Queensland real estate agents, and they are reporting a slow-down and lower sales activity.  That is, nothing is selling.  (The median house price data released by REIQ, which is for houses (not apartments) is not that useful, if there are few sales.  The price data reports only on what is selling today, and not whether values for any particular property have risen or fallen.)

Saturday, August 18, 2012

Off-the-plan risks

An interesting article Off-the-plan properties are a risky acquisition.  This article has some good information, but it is focused on the southern States.  For a Queensland perspective, have a look at the Kindle Book (also available on Google Books) Buying An Apartment Off the Plan in Queensland.

Wednesday, August 15, 2012

Rive Breakfast Creek

I recently visited the display apartments at Rive, Breakfast Creek.   (It is being advertised as Breakfast Creek, but it is really in Albion.)  I must say that I was a little disappointed.  The finishes inside are almost the same as the same developer did for Fresh Apartments in Toowong a number of years ago -- no improvement in finishes, and so Rive Apartments look so last decade.

The views I saw from the apartments were of flat metal roofs of neighbouring industrial areas, and busy roads.  The common space felt to me like a second tier suburban office park.  The surrounding neighbourhood is not fantastic by any means, unless you want to go to the Breakfast Creek Hotel or Albion Racetrack, which both neighbour this complex.

Prices have dropped (at least from the list price, which I suspect was always an opening gambit) -- a two bedroom has dropped from $610,000 to $570,000; and a three bedroom has dropped from $710,000 to $670,000.  An 88 sqm internal two bedroom is listed for sale at $640,000.

Tuesday, August 14, 2012

Too Many Rentals Available?

"Investors returning to the property market - and, at times, frustrated vendors unable to sell - have pushed the number of properties advertised for rent to 7057, up from 5732 in July 2011, the latest figures from RP Data reveal. New rental listings are also up, with 3403 new listings compared with 2619 new listings for the same time last year." See Courier Mail

Holiday Letting Agent Investigation

An interesting article in the AFR on 9 August (page 45) about StayMint (or Mint?) real estate letting agent, and how (it is alleged) they were renting out apartments on a short term basis, but not paying the owners for the rentals.  It seems that the government is investigating.  This is not a rare problem -- I have heard similar stories in the past about apartment buildings in Brisbane that are rented out on a short term basis, and holiday apartments on the Gold and Sunshine Coasts where the real estate agent or onsite agent pockets the money and tells the owner that the apartment is vacant.  This same business manages Skyline in Brisbane.

See "Stay Mint Faces Complaint"

"The Queensland Office of Fair Trading is investigating holiday letting company StayMint, a wholly-owned subsidiary of listed property group Ariadne, following complaints from owners of a Gold Coast apartment block about financial irregularities. Fair Trading officers raided the StayMint office at a Broadbeach apartment complex, Carmel by the Sea, last Thursday and seized financial documents.... The owners said they had discovered people had stayed in their apartment but the stay was not recorded in the monthly statement to the owner, and the rent not paid."

Housing Risk

An interesting article by Chris Joye:  Housing Risk: It's greater than you think.

"Using some complex statistical methods pioneered by US academics, we estimate that the annual volatility of an individual home with no debt is about 18 per cent. That is similar to the observed risk of the Aussie sharemarket.

But this assumes you have no debt. What happens when you leverage up? The most variable dotted line in the second chart displays the monthly returns yielded by an individual home with 80 per cent gearing. This has a spectacular impact on risk and return. The annual equity volatility of a single property jumps from 18 per cent to north of 38 per cent. On the other hand, returns are also higher.

The key to mitigating risk is diversification. This ideally means a portfolio comprising multiple assets situated in unrelated regions. Hard to achieve, I know. Without diversity, your best way to reduce risk is by using less debt."

See also: 10% lose money when they sell home -- circa 15% after costs

Ray White's view

This from a Ray White agent's newsletter, about the Brisbane inner-city apartment market:

"Large amounts of buyers enquiring on our properties. I have not seen this level of enquiry since the peaks of 2007. We are expecting price movement in the second half of 2012, on the back of large amounts of property selling."

I guess times must be good.  I have emailed a number of agents about apartments listed for sale in Brisbane, and many have not returned my emails.  I have inspected a few, and asked to put in an offer, but no reply.  I guess there are too many buyers out there, over-running the agents!  Or maybe, too many agents have quit the business during the past lean years?

Sunday, August 12, 2012

The Plaza South Brisbane

David Devine’s Metro Property Development group has increased its commitment to the inner-Brisbane apartment market, with approval granted for an $80 million project in South Brisbane.  The 12-level development, called The Plaza, has been designed by architects Deicke Richards and is due to be built at the corner of Russell and Manning streets on a 2,270-square-metre site and will feature 168 apartments.

Off-the-plan marketing of the project will begin later this month.  It will offer a mix of one- and two-bedroom apartments, ranging in price from $330,000 to $575,000. The project will take the value of Metro’s approved apartment developments in Brisbane to more than $400 million.

Metro currently has 1,337 apartments under construction or approved for development in inner Brisbane and a further 950 apartments in the pipeline.

See Property Observer and Prior Post

Comment emailed to me by a reader, after this post was published:

"I came across your blog while searching for a project called The Plaza by developer Metro as you would probably know about. I was basically doing more research on the project as I may be interested in investing in it. Upon researching I found out that Aria would build one called the Vines directly in front of The Plaza which probably would have The Plaza looking to another building rather then the great city views it promises. Bascially from reading through your blog, you have given your opinion on Vines being too expensive...i agree btw."

Saturday, August 11, 2012

First Home Buyers Return

From an REIQ press release:

The low interest rate environment and more affordably-priced properties are continuing to attract Queensland first home buyers into the property market, according to the Real Estate Institute of Queensland (REIQ).

The latest Australian Bureau of Statistics data found that more than 1,650 properties were financed for Queensland first home buyers in June - an increase of 30 per cent on June last year.
And over the June quarter, according to the Office of State Revenue, more than 5,400 First Home Owner Grants were paid in Queensland compared to 4,000 over the same period in 2011. 

Friday, August 10, 2012

Place Report: Sales of New Apartments in Brisbane

Place Real Estate Agents have issued their report about off-the-plan sales and sales of new apartments in Brisbane in the June 2012 quarter.  Here is an extract:

Summary of the June 2012 Quarter page3image35080
  • The June 2012 quarter saw a total of 426 unconditional sales. This is in line with the 448 unconditional sales recorded during the March quarter and is 73% above the 240 sales recorded during same period in 2011.
  • A weighted average of $567,664 was recorded during the June 2012 quarter. Again, this is in line with previous periods, presenting a weighted average price only 5% below the June 2011 and resulting in a 12 month rolling weighted average price of $548,806.
  • Almost 70% of the unconditional transactions during
  • the three months to June 2012 were recorded under $550,000. A total of 11% of the period’s sales were made above $750,000. This is representative of a market that remains price point sensitive.
  • Total gross sales, in dollar terms for the June quarter, was approximately $242 million, a figure 40% above the average total gross quarterly sales numbers recorded during the past five years.
  • There were three new projects launched during the June 2012 quarter. Hamilton Reach’s new release, Watermarque on the Park, Drew Group’s Precinct and a newly renovated building in Kangaroo Point named Bella Vista.
  • Brooklyn on Brookes was the top performing project for the quarter, registering 52 unconditional sales and Madison Heights saw a further 49 unconditional sales taking second position. Following this, Precinct in the Fortitude Valley totalled 38 transactions and Watermarque on the Park registered 34 unconditional sales taking the project to 50% sold on release.
  • Inner Brisbane supply tightened during the June 2012 quarter. At the close of the financial year, 1,871 new residential apartments remained for sale. Based upon the sales rate recorded during the June quarter, this translates into a market supply of only 13.5 months.
  • Of the apartments which remain for sale, two bedroom supply has increased through the past 12 months to now represent 54% of the available supply. A further 33% are one bedroom apartments whilst only 9% of stock are three bedroom configurations.

Admiralty Precinct Sales

From an email from agent Colin Walsh:

During the first half of 2012, we have handled the sale of 3 apartments and achieved outstanding results for our clients, please see the list of units sold with the sale prices.
SOLD - 105/35 Howard St, Brisbane $532,500
SOLD - 139/501 Queen St, Brisbane $651,000
SOLD - 151/32 Macrossan St, Brisbane $963,000

Wednesday, August 8, 2012

El Dorado Bust

Although there is still website advertising for PCN's El Dorado Village apartment development at Indooroopilly, it seems like the developer is in receivership, and the undeveloped property is for sale.  This is not a surprise.  See past posts on this issue.  Supposedly over 70 of the 100 apartments had been sold of the plan.  Either this was a lie, or the developer just could not make the project work even at PCN's crazy high off-the-plan prices.  I hope you are not waiting to move in to your new apartment at El Dorado Village!

I guess it is good-bye, not good buy, El Dorado Village.

Monday, August 6, 2012

Brisbane Airport Proposed Second Runway

What impact will the proposed changes to the Brisbane air traffic patterns have on apartment values in Hamilton?

Sunday, August 5, 2012

Uncertainties, Risks and Body Corporate Fees

I feel that now is probably a good time to buy an apartment in Brisbane.  Prices are down, and there are many good apartments for sale.  However, there are uncertainties that are holding me back:
  • What will happen if the mining boom comes to an end?
  • Will Newman's retrenchment of 20% of the public service kill any chance of growth for the next 3 years?
  • Will Newman increase land tax rates and lower land tax threasolds in Queensland?
  • What will Newman and the Attorney-General do in relation to the complex issues regarding lot adjustments (that impact the percentage of body corporate fees an individual unit owner will pay)?  If I buy now, will the unit entitlements be adjusted up in the near future so that my body corporate fees will increase?  Will there be costly legal action between the body corporate and various interest groups in the buildings.  See here and here for example.  Changes to this are a priority for the government it seems, to reward penthouse owners for voting for the Liberal party.
So, for the time being, there is too much uncertainty and risk to buy an apartment (or an investment property) in Brisbane or Queensland.

Regardless, body corporate fees and council rates are becoming prohibitively high, and make investing in apartments less attractive.

I looked at an older apartment on the river recently.  It has been on the market for more than 6 months.  It is a 2 bedroom (with a small second bedroom), with river views.  The facilities are moderate -- no doorman, onsite manager, reception desk or the like.  The list price has come down, and is now $455,000.  But the body corporate fees are $8,830 a year, and council rates are $2,000 a year.  So more than $10,000 a year in these expenses.  The rent for this apartment would be about $400 a week, or about $365 a week after real estate agent's fees.  So that is 30 weeks, or more than half a year's rent, just to cover body corporate levies and rates!  Clearly, this is not a good investment, even if the price drops another $100,000.

Post-script -- comment from a reader after this post was published:
Your sentiments re purchasing a unit or apartment in Brisbane reflect my own also, very valid points.
Another is upcoming or planned or approved “future” capital works such as painting, under-pinning, structural repairs, landscaping, tree removals and the like. At a number of units I have looked at, the agents got very cagy when put the question. Pressing one very hard got I wind of a complete paint job coming up within 2 years,  approx $250,000k across 80 units, and unit titles re-appropriation may also make some owners rather unhappy as well. Ouch! Another had $30,000K in quotes not yet voted on (but very necessary since drains were becoming repeatedly blocked by roots) for tree removal. Ouch!  Many units 10 years and over now need a lot of work, much of which has been delayed or put back but  it’s coming. New buyers beware.
Article in AFR, 7 August, P38: Newman at a get together of banks and bizo’s was playing pretend Reserve Bank Chief and instructing banks to start lending. Banks won’t (as we all know), denying they should take risks just for Newman et al. Last para of article states : At a meeting of people from the big four banks recently, one person from one of the big four proclaimed  “We’re not lending anything into Northern Australia. Northern Australia begins at Nundah in Brisbane.”

Saturday, August 4, 2012

South Brisbane Apartments

There are two large apartment buildings currently in presales in South Brisbane.  One is Metro's The Plaza development.  The other is Pradella's Canvas.

The Plaza is 12 levels of one and two bedroom apartments, priced up to $575,000.  It is on the corner of Russell and Manning Streets.

Canvas is located on Boundary Street, and has 141 one and two bedroom apartments.  The one bedrooms start at $346,000 and the two bedrooms start at $538,000.  The one bedrooms shown on the website are small -- 44 sqm internal plus a 10 sqm balcony.  This is about the size of a hotel suite.  The two bedrooms range in size (internally) from 76 to 82 sqm.  They are lower quality apartments, with the air conditioning compressor on the balcony for example.

To get a good idea of how small these apartments will be, have a look at a prior Pradella project in South Brisbane -- Allegro.  Some details about Allegro are here, and video here.  Go and have a look before you buy off the plan, so you can see what a small apartment is like.  Apt 96 is for sale for $410,000, and it has two bedrooms.  Apt 72 is two bedrooms with city views, listed at $420,000.

Or you can buy a top quality 2 bedroom apartment today in Saville South Bank, for $500,000 to $540,000.  Saville is in a better location than The Plaza and Canvas, and is a much higher quality build than Allegro.  Apt 1115 is a two bedroom listed for sale for $529,000, and it is 85 sqm internal with a 10 sqm balcony.  I could be wrong, but this seems to me to be a much better buy than a smaller, lower quality apartment in Canvas which is more expensive, and has the added significant risk factor of buying off-the-plan.

Friday, August 3, 2012

River Place - Recent Sales

Recent sales for River Place, 82 Boundary Street, on the river in Brisbane.
  • Apt 142, 2 bed, 2 bath, sold in May fully furnished for $563,000
  • Apt 79, 2 bed, 2 bath, sold in May for $618,000
  • Apt 98, 1 bed, 1 bath, sold in March for $402,000
  • Apt 59, 2 bed, 2 bath, sold in March for $539,500
  • Apt 319, 4 bed, 2 bath, sold in March for $1,815,000

Oaks Aurora Towers - Recent Sales

Recent sales in Oaks Aurora Towers, an apartment building at 420 Queen Street that is managed by the onsite manager as a short term serviced apartment complex.
  • Apt 316, 2 bedrooms, 2 bathrooms, sold in June for $582,500
  • Apt 84, 2 bedrooms, sold in May for $512,500
  • Apt 439, 2 bedrooms, 1 bathroom, sold in May for $500,000
  • Apt 289, 2 bedrooms, 1 bathroom (no car), sold in May for $420,000
  • Apt 356, 2 bedrooms, 2 bathroom, sold in April for $600,000
  • Apt 514, 2 bedrooms, 2 bathroom, sold in March for $605,000
  • Apt 368, 2 bedrooms, 1 bathroom, 1 car, sold in March for $428,000
Highest priced sale this year:
  • Apt 626, 3 bedrooms, 3 bathroom, 2 car, sold in January for $1,255,000 (after being listed for over 250 days for sale according to online databases).

Apartments or Houses?

"Nationally, 58% of flats, units and apartments are owned by investors. That is quite an amazing statistic, especially when you compare that with detached houses where only 21% are investor owned. Across the capital cities the proportions are even higher. Darwin tops the list with 70.6% of all units being rented followed by Brisbane where 70.2% of all units are rented."

See RP Data Blog

Barefoot Investors Advice re Property

"My opinion on traditional Aussie housing hasn't changed one iota: I still firmly believe that most investment properties bought today are a trap. Their prices are too high and their returns too low to justify the dangerous debt burden needed to 'get in the property game'. That fact is backed up by the Australian Tax Office's latest figures, which show that, despite collecting $28 billion in rents last year, Australia's landlords still reported a $4.8 billion loss. Less than four in ten property investors made any money last year." Source: Barefoot Investor

Thursday, August 2, 2012

South Brisbane apartment

Proposed apartment building by Aria at 77 Grey Street in South Brisbane.  Proposed to be 18 stories.
36 two bedroom apartments & 84 one bedroom apartments (for a total of 120 apartments), but only 106 car parks including visitor car parking.
Many of the apartments will have a nice view of the wall of the museum, or the very busy Grey St/Melbourne St intersection and busway.

Queen Street Proposal

Proposed building by Grocon for the failed Trilogy site in Queen Street.  Aurora Towers on the far left.  The proposed building is not riverfront, but on the far side of the road from the river.  Newspaper reports say that national law firm Freehills has agreed to rent the top 3 floors.  I wonder if this building will get off the ground, or be like Trilogy Tower and never be built?

Gold Coast Prices Have Further to Fall

THE Gold Coast housing market is about six months off the bottom, according to analysts.  Two separate housing indexes showed a rise in capital city house values in June, indicating the slump in house prices appears to have bottomed and the market is about to improve again, underpinned by recent interest rate cuts.

But the Gold Coast recorded one of the largest falls of any region in the country and still has some way to go, according to RP Data research director Tim Lawless. "I don't think it has reached the bottom yet but the Gold Coast is probably approaching that mark and in the next six months should bottom out and start turning around," he said.

Story Here

111 Eagle St Opening

111 Eagle Street opened last night.  It is not an apartment building, but it is next door to Riparian apartments.  Photo here.

No significant improvement: RP Data

Summary of RP Data report:
Capital city home values increased by 0.6% in July after increasing by 1.0% in June
·         Capital city dwelling values increased by 0.6% over the month of July 2012.  Dwelling values are down -0.6% over the first seven months of 2012 and down -2.4% over the twelve months to July 2012.  Home values remain -5.9% below their historic highs across the combined capitals with falls from the peak ranging from -11.5% in Brisbane to -2.9% in Sydney.
·         Looking at value movements across broad price segments in the market to June 2012, the premium housing market is recording the largest falls (down -3.4% over the year) while the broad ‘middle market’ has been the most resilient with values falling by -2.0% and the most affordable suburbs have recorded value falls of -2.9%.

Sales activity showed a slight improvement in May however, there has been no significant improvement to date despite recent interest rate cuts
·         Estimated sales volumes are currently -14% below the five year average nationally and -13% lower across the combined capital cities
·         Compared to volumes in May 2011, sales volumes are currently -4% lower nationally and across the capital cities.

Rents continue to improve in certain areas and across specific product types while yields continue to trend upwards
·         Capital city house and rents have increased by 3.0% over the 12 months to July 2012
·         Gross rental yields for houses have improved from 4.0% last July to 4.2% currently and for units they have increased to 4.9% from 4.6% last year.

Vendor discount levels and time on market are trending lower but remain at elevated levels
·         Based on private treaty sales, it took an average of 60 days to sell a house in the capital cities in June 2012 compared to 68 days at the same time last year. 
·         Vendors are now providing an average discount of -7.2% from their initial listings price, at the same time last year the average vendor discount across the capital cities was recorded at -7.6%

The number of homes for sale has been easing however, on an historical basis they remain at quite high levels
·         RP Data is tracking around 296,000 unique houses and units that are available for sale across Australia; that’s about 9% higher than at the same time last year.
·         New listings are actually -14% lower than at the same time last year.
·         More than half of the total listings are located in the non capital city markets despite the fact that only 35% of sales take place in these locations.

Economic data flows remain mixed
·         Headline inflation is at 1.2% and core inflation is at 2.0% and trending lower.
·         The Australian economy grew by 4.3% over the first quarter of 2012.
·         The unemployment rate increased from 5.1% in May to 5.2% in June.
·         Consumer confidence for July 2012 showed that optimism was outweighed by pessimism however, the Index increased by 3.7% over the month.
·         First home buyers accounted for 17.8% of all owner occupier finance commitments over the month.
·         Overall housing finance (ex-refi’s) are up 2.8% over the year while refinance commitments are up 7.5% over the year.
·         Private sector housing credit continues to grow at record low levels of just 5.1% over the 12 months to June 2012.
·         Dwelling approvals were up 10.2% in June 2012 compared to volumes a year earlier.

Wednesday, August 1, 2012

Brisbane Apartments are Worst Performing Market: RP Data Statistics

Dwelling values across capital cities recorded a second month of capital gains in July with dwelling values up by 0.6% over the month following a 1.0% rise in June.  The RP Data-Rismark Home Value indices posted a second successive rise in capital city dwelling values over the month of July. Across the combined capital cities, dwelling values rose by 0.6 per cent over the month with the rises being relatively consistently over the first three weeks of July followed by a -0.2 per cent fall over the final week of the month.  Over the three months to the end of July, capital city dwellings have posted an increase of 0.2 per cent.
See RP Data July Release

Brisbane apartment prices:
July 2012 - down 2%
Quarter - up 0.3%
Year to Date - down 3.9%
Year on Year - down 5%
Median price based on settled sales of Brisbane apartments over the quarter - $366,000.
The Brisbane apartment market is the worst performing capital city apartment market in Australia this year.

Below is a chart for dwellings, which includes both houses and apartments:

Brisbane Downtown Ghost town

An interesting article from The Telegraph that says that the Brisbane downtown is a ghost town.  But despite this, car parks are charging $72 to park for 3 hours.

Census Snapshots

Click here for an interesting census tool.