Sunday, September 30, 2012

Meriton Infinity - Under Construction

Some recent photos of Meriton's Infinity apartment building in Brisbane, currently under construction.  When complete, this will be Brisbane's tallest residential tower, at 81 floors.  So I guess it is about half way now.

Infinity on the left, with Evolution Apartments on the right.  This was taken about two weeks ago.

Infinity behind Evolution Apartments, with Federal Court building in the foreground.  Taken this weekend.

From Roma Street Parklands, with one of the Pradella Parkland apartment buildings on the right.

From Roma Street Parklands

Friday, September 28, 2012

Many Property Clocks

"There are some signs of a recovery in the Brisbane property market, but it still remains firmly in a downswing , with investors seeking bargains in the unit market as new apartment projects are completed, says WBP Property Group. WBP places the Brisbane housing and unit market at five o’clock on the property clock.

“Many purchasers who have bought off the plan have seen prices come off from original date of contract. Investors still remain wary as to when the bottom will be and are on the lookout for a bargain buy,” says WBP

See Brisbane Downswing

So we have some commentators saying that Brisbane is at 12 noon (top of the market, and set to fall) and others saying it is "on the cusp of improvement", and now at five o'clock.  Who really knows?  These are all just guesses.  Your guess is as good as theirs.

Decline in Proportion of Apartment Sales

"Although units offer a significantly lower price point at which to enter the housing market, the vast majority of sales across the country are for detached houses as opposed to units. The recently released 2011 Census data showed that 75.6% of occupied dwellings were houses highlighting that they well and truly remain the dominant housing type.

Over recent years there has been a decline in the proportion of units sold, both nationally and at a capital city level. The decline can partially be attributed to the fact that more recent off-the-plan unit sales don’t enter into our figures until they reach settlement. The decline may also be as a response to first home buyer grants and stamp duty concessions that have been available, as well as recent falls in home values which has improved affordability. Unit values have typically recorded lower value declines than that of houses and this may be leading to buyers taking the opportunity to buy houses as opposed to units."

RP Data: Why has the proportion of unit sales declined since 2009?

Monday, September 24, 2012

Self managing landlords

One issue for landlords who self manage is obtaining access to  REA only allows agents to list properties for rent. allows individual landlords to list a property for rent.  In Brisbane, more people seem to use REA than Domain (although I suggest to people looking to rent to search both sites.)  Now there is a service that allows self-managing landlords to list on REA.  See

Sunday, September 23, 2012

Ten Percent Under Water in Queensland

"Ten percent of Queensland homes are currently worth less than or equal to their purchase price while 36 percent are worth more than double the purchase price.  At the same time a year ago, 5.3 percent of homes were worth less than or equal to their purchase price and 39.3 percent of homes were worth more than double their purchase price.  These results highlight the growing impact of the continued underperformance of the Queensland housing market."

From RP Data Accumulation Report, June 2012 Quarter (Report released September 2012)

Brisbane is slightly better than the Queensland statistics.

Saturday, September 22, 2012

Kings Row, Milton Development

Investa has gained approval for a property development on busy Coronation Drive in Milton, backing on to McDougal Street.  The three office buildings currently on the site will be demolished, and replaced with two residential buildings containing 293 apartments and two office buildings.  I wonder how these buildings will impact the views from FKP's The Milton project.  Details here.

Hilton Surfers Paradise Price Slice

Hilton Surfers Paradise Apartments advised "up to 34% off":
  • Level 29, 2 bedroom, 119 sqm, was $1,185,000, now $840,000
  • Level 38, 3 bedroom, 147 sqm, was $1,750,000, now $1,300,000
  • Level 30, 2 bedroom, 100 sqm, was $1,000,000, now $685,000
According to Ray White Surfers Paradise, "the Chinese and Singaporeans have saved the Gold Coast property market" because "Australians have stopped buying over the last three years" in projects such as The Hilton and The Oracle.

Advertised Rents

In today's Courier Mail and on REA, the following new developments had apartments that were advertised for rent:
  • Mirvac's Park apartments at Newstead - 2 beds at $700 a week; 3 beds at $1000 a week; 1 bed furnished at $650 a week
  • Pradella's Urban Edge at Kelvin Grove - 1 bed from $345 a week; 2 beds from $485 a week
  • Metro Property's The Chelsea at Bowen Hills - 1 bed for $405 a week; or $324 via NRAS; 2 bedrooms from $510 a week

Brisbane Apartment Recent Auction Results

River Place - 82 Boundary Street, Apt 192, 2 bedrooms, sold for $605,000
Aurora - 420 Queen Street, Apt 286 - passed in
Skyline, 30 Macrossan Street, Apt 304 - passed in
Admiralty Quays, 32 Macrossan Street, Apt 95 - passed in

Recent Sales - Arbour on Grey

Some recent sales for Arbour on Grey, at Grey Street, South Bank.  This building was developed by Mirvac about 10 years ago.

Apt 2103, 3 bedrooms, 2 bathrooms, 2 car parks, level 1: $800,500
Apt 2223, 2 bedrooms, 2 bathrooms, 1 car park, level 2: $610,000
Apt 2320, 2 bedrooms, 2 bathrooms, 1 car park, level 3: $660,000
Apt 2225, 1 bedroom, 1 bathroom, 1 car park, level 2: $400,000

This complex rents well.  Currently, there are no apartments available for rent in Arbour on Grey.

There is a 2 bedroom apartment currently for sale for $630,000.

Friday, September 21, 2012

Increase in Sales of One Bedroom Apartments in Brisbane

"Research from Colliers and Place Projects reveals that there were 1,065 new project apartment sales Brisbane in 2007 and 1,278 in 2011.  The average sale price in 2007 was $688,000 with 54% of new units being 2 bed, 22% were 1 bed, 18% were 3 bed and 6% were penthouses or the like.
The average sale price in 2011 was $560,000 with 45% of new units being under $550,000 (mostly 1 beds), 46% between $550,000 and $750,000 (mostly 2 beds) and only 9% for larger units. The sale of more affordable 1 bed units jumped from 22% to probably near 40%.  This accounted for the drop in the average sale price."

One57 in New York

"One57, a 306-metre tower under construction in Midtown Manhattan, will soon hold the title of New York's tallest building with residences. But without fanfare from its ultraprivate future residents, it is cementing a new title: the global billionaires' club. The buyers of the nine full-floor apartments near the top that have sold so far — among them two duplexes under contract for more than $90 million each — are all billionaires, Gary Barnett, the president of the Extell Development Co., the building's developer, said this week. The other seven apartments ranged in price from $45 million to $50 million. The billionaires' club includes several Americans, at least two buyers from China, a Canadian, a Nigerian and a Briton, according to Barnett and brokers who have sold apartments in the building, at 157 West 57th Street."

Full story here

Thursday, September 20, 2012

SkyView Apartments at Urban Edge

Pradella has commenced a soft marketing launch of Skyview Apartments, the third building in the Urban Edge development at Kelvin Grove.  Priced from $345,000.  Settlement expected in late 2014.

Prices Up? But sales volumes are down

""Real estate is a confidence thing and confidence gets zapped by uncertainty and all the information we've been getting from overseas and at home has certainly zapped confidence."  Mr Kardash also noted the median house price provided a limited snapshot of the property field, because the figure could often be skewed by an inordinate number of sales at either the low or top end of the market in a given time period.  Like Mr Matusik, he said the 4.7 per cent drop in the median house price in the 12 months to June this year reflected the majority of activity which occurred at the lower end of the market.

Mr Kardash said the Brisbane market was on the "cusp of improvement", although he noted the middle price range remained relatively stagnate.

"Just recently the market's seen a little bit of a pick-up in the very top end ... but for us, we'd be looking at all three price ranges to be showing an improvement before you could call that the industry was on the way up," he said.

Wednesday, September 19, 2012

Brisbane Apartments Prices to Fall

"The Brisbane inner-city apartment market is heading into a downswing due to the large numbers of off-the-plan projects currently being marketed in the Brisbane CBD and surrounding suburbs, according to property investment adviser Michael Yardney.

Yardney, the director of Metropole Property Investment Strategists, places the Brisbane unit market at two o'clock on the property clock – 12 o’clock indicates the property market has peaked while 3pm indicates the market is in a downswing.

Yardney expects there to be an oversupply of inner-CBD and near-CBD apartments in Brisbane for the next few years, causing prices to fall slightly.

Most recent data put out by the Real Estate Institute of Queensland has unit and townhouse prices in Brisbane up 3.8% over the June quarter to a median of $402,500 – but down 1.5% year-on-year.

Yardney says many of the Brisbane projects being currently marketed will remain unsold and this oversupply of properties will put downward pressure on prices and rentals.

“Many of the apartments that have been sold off the plan are coming on stream in the next few years and have been purchased by investors.  Some will have difficulty getting finance and settling their purchase. Others will be disappointed to see the end value of their properties is less than their purchase price,” he says.

Yardney assesses the Brisbane detached house market to be between four o’clock and five o’clock – still in a downturn but on the way to bottoming out.

“House prices have dropped for the last two years in Brisbane.  Brisbane buyers are lacking confidence to re-enter the market and are sitting on the sidelines waiting for signs that the market has bottomed before they make a purchase. Many were waiting for the resources boom to reignite their property market, but recent negative media has again dampened confidence,” says Yardney.

According to Yardney there are signs that the inner and middle-ring Brisbane home market is picking up, with more buyers returning and many properties now selling under a multi-offer scenario.

“Brisbane is entering the stabilisation phase of its property cycle, but prices are unlikely to start rising until 2013.”

Full Story on Property Observer

Changes to Lot Entitlements, Again

The Campbell Newman Queensland Government has decided to change the lot entitlement laws, yet again.  This adds more uncertainty for apartment owners and people intending to buy apartments.  It also enables a body corporate to reverse any recent changes made to their lot entitlements under the prior law.  So some apartment buildings will end up having 4 lot entitlement schemes within 4 years.  As a direct result of these changes, some apartment owners will have their body corporate levies increased, and a minority of apartment owners will have their body corporate levies significantly decreased.

The Newman Government is clearly favouring rich penthouse owners over those owning the less desirable apartments in a building.  These changes will create further disharmony in some apartment buildings.

Before buying an apartment in Queensland, you should make sure you fully understand the implications of these changes.

Details see:  SSKB newsletter   (Story about old law that has now been repealed is here.)

Tuesday, September 11, 2012

Home Truths of the Leverage Game

An interesting article by Chris Joye in the Weekend AFR, worth reading:

The Perils of Leveraging Property Investment

Newman State Budget

  • An increase in stamp duty: Increase in the transfer duty threshold from $980,000 to $1 million; rate to increase to a whopping 5.75 per cent.
  • FHOCG:  For first home owner buyers who buy a new or off-the-plan apartment or house in limited circumstances.  Terry Ryder thinks it is a bad idea.  Will it just add $15,000 to the price of  new properties?  It is just another payback to developers who supported Newman, including the apartment developer who is Newman's father-in-law.  Why is the government trying to encourage young people to buy overpriced new apartments?

Monday, September 10, 2012

Agents to Vendors: Get Real

An article in the Weekend AFR:  Agents tell vendors to get real.

"Because prices haven't improved, only about 20% of sales are actually achieving what the vendor wants.  ... a lot of homeowners are still discounting to sell."  Click on image below to get full size story.

Sunday, September 9, 2012

REIQ June Quarter Apartment Report

From an REIQ Press Release:
"The Real Estate Institute of Queensland (REIQ) June quarter median unit and townhouse price report has found healthy price increases across many parts of the State.  The solid median price growth was despite decreased numbers of unit and townhouse sales – similar to the house market over the June quarter.

Over the June quarter, there was increasing numbers of first home buyers and investors in the market, compared to owner-occupier activity which was reduced, so this is partly behind this good price growth.
“As was the case with the house market, there was reduced unit and townhouse sales activity over the June quarter as many buyers waited for the return of the stamp duty concession on 1 July,” REIQ CEO Anton Kardash said  “However, as first home buyers and investors were unaffected by the stamp duty change, these buyers were more prominent over the June quarter.  Given the affordability of units and townhouses, as well as their often more central locations, first-time buyers and investors often compete for this type of property which may be partly responsible for the increases in median prices we experienced over the period.”

The preliminary number of unit and townhouse sales across Queensland decreased 15 per cent in the June quarter compared to the March quarter.  

Brisbane recorded a median unit and townhouse price increase of 3.8 per cent to $402,500 over the June quarter.  Over the period there was also an increase in the number of high-end unit sales in Brisbane city and city-fringe suburbs which augurs well for confidence levels amongst buyers." 

The chart below is from REIQ.  It says March, but it should be June Quarter I suspect. Click on chart to make larger.

Thursday, September 6, 2012

Quay West Sales

There have been three recent sales of one bedroom apartments in Quay West, at 132 Alice Street, Brisbane.  These are large one bedroom apartments, about 74 sqm including balcony, which is the size of many two bedroom apartments.  These apartments have views of the Botanical Gardens.

The recent sales have been for $450,000 (two apartments) and $460,000.  It is not clear if the apartments are being sold furnished or not.  These are prices at 2009 levels.  There was a dip back to the $420,000 mark in 2011, but now pricing has recovered.

By comparison, a number of 1 bedroom apartments in Admiralty Quays have recently sold for $580,000, and one at $595,000 in August 2011.  (In September 2009, a one bedroom sold for $612,500, so not yet back at that peak.)  Admiralty Quays is a high quality building with direct riverfront.  These one bedrooms are about 76 sqm.

Wednesday, September 5, 2012

Unrealistic List Prices and Lowball Offers

A nice article:  "Lowball offers for property not uncommon in current soft market and hard for vendors to swallow".  I am often surprised by the list price for an apartment.  For example, I have seen some apartments recently where the list price is $100,000 more than the sales price of a similar apartment a few floors away that recently.


"Many vendors (irrespective of the value of the home) can be fixated on achieving a particular price for one reason or another. Owners of premium properties are no different and can sometimes be stuck on an unrealistic price. Quite often when sales agents call to inform me of silent listings, the first thing I ask is how the price has been determined. Very often they openly admit that it has been hard to set the price and ultimately it has been dictated by the vendors. In these instances, it can take time to condition the vendors to accept a significantly lower price than they originally hoped for."

Monday, September 3, 2012

Capital growth flat in August after rising in June & July: RP Data

The above headline does not really apply to the Brisbane apartment market.  Read on....

After recovering by one per cent in June and 0.6 per cent in July following the RBA’s back-to-back rate cuts, dwelling values across Australia’s combined capital cities were unchanged in August. At the end of August, dwelling values across Australia’s combined capital cities were down just -0.6 per cent in the first eight months of the year compared to a -2.2 per cent year-to-date loss in May. The year-on-year numbers have also shown a substantial improvement. Dwelling values were down -2.4 per cent at the end of August compared to -5.3 per cent in May.

“Improved affordability since June has helped dwelling values rise across every capital city over the three months ending August 2012, apart from Adelaide. The big question is, ‘can this growth be sustained?’ On the one hand, winter is seasonally slow, so these results have been encouraging. On the other hand, we know that there is likely to be an increase in new supply over Spring, which may introduce some headwinds for a recovering market. How the market plays out over the Spring season will be an important litmus test for its resilience,” Mr Lawless from RP Data said.

A spokesman from Rismark added, “Late last year we forecast that housing conditions in 2012 would deliver a material improvement over the -3.8 per cent loss suffered in 2011. Despite the fact that the RBA did not cut rates again until May, and we had the banks hike rates by about 25 basis points in the intervening period, the national market has clearly stabilised.”

The Brisbane apartment market showed some improvement over the past 3 months, but still not enough to recover from price deflation in late 2011 and early 2012.

Brisbane Apartments: Capital Growth to 31 August 2012

Month:  Up 2.1%
Quarter:  Up 2.1%
Year to Date: Down 1.9%
Year on Year:  Down 2.3%
Median Price Based on Settled Sales over Quarter: $350,000.

Brisbane apartments are doing better year on year and in the last quarter than Brisbane houses.

Source:  RP Data

Gold Coast less than $300,000

From the HTW Month in Review for September 2012:

"In Surfers paradise there are plenty of options for purchasers with $300,000 to spend, including older style units starting in the low $100,000’s and 1- bedroom, 1- bathroom units in modern highrises ($250,000 to $320,000). An example is Unit 709 in Wings residential which is a 7th floor 1- bedroom plus study with 2- bathrooms in a circa 2004 building that sold on 28 June 2012 for $250,000.

Just south of our tourism mecca, a semi-modern unit in a three storey walk-up in 2-bedroom, 1-bathroom configuration in Mermaid Beach/Broadbeach falls under the $300,000 category. An example is Unit 43 in Diamond beach South in Mermaid Beach which sold on 2 March 2012 for $300,000 - a 1994 2-bedroom, 2-bathroom lowrise unit with a floor area of 105 square metres."

Sunday, September 2, 2012

Skyline Apartment Recent Sales

Some recent sales at Skyline Apartments, also known as Mint Short Term Apartments, at 30 Macrossan Street, Brisbane:
  • Apt 393, 3 bedroom, sold in April 2012 for $800,000 (originally sold off the plan in 2004 for $840,000)
  • Apt 154, 3 bedrooms, sold in April 2012 for $745,000 (originally sold off the plan in 2007 for $815,000)
  • Apt 203, 2 bedrooms, sold in February 2012 for $530,000 (originally sold off the plan in 2008 for $615,000)
  • Apt 123, 2 bedrooms, sold in February 2012 for $600,000 (prior sale was in 2007 for $630,000)
  • Apt 251 sold in August 2012, price not yet reported
Does not look like values have held up very well in Skyline Apartments.

Saturday, September 1, 2012

Recession on the way?

Meriton's Soleil - original buyers under water

I have re-looked at Meriton's Soleil apartments, now that they have finished.  If you like high apartments with great views, then the upper floors are for you.  The two bedroom apartments on the higher floors are nice apartments.

Positive aspects:
  • good floor plans
  • reasonable size (87 sqm internal)
  • includes blinds
  • floor to ceiling tiles in bathroom
  • bath and separate shower
  • linen cupboard
  • floor to ceiling windows with fantastic views
  • good ceiling height
Negative aspects:
  • building also used as short term stay "hotel"
  • lobby includes hotel check-in desk
  • only 3 elevators to upper floors
  • no balcony
  • indoor pool, shared with hotel guests
  • no central air con -- head-end on apartment wall
Pricing at present for a two bedroom on higher floors is in the $615,000 to $650,000 range, with stamp duty rebated, plus other offers available.

Looking at settled sales, it appears that off-the-plan purchasers paid more for similar apartments than those currently for sale.  But it is hard to tell, because the developer has rent guarantees, discounts, rebates and cheap vendor financing.  Looking at the 01 floor plan on the higher levels (which is a good 2 bedroom floor plan):

Apt 5001 - sold in 2012 to interstate investor for $635,000 
Apt 5101 - sold in 2012 to owner occupier for $650,000
Apt 5301 - listed for sale at $627,000
Apt 5401 - sold in 2012 to Brisbane resident for $599,000
Apt 5501 - sold in 2009 to Queensland investor for $790,000
Apt 5601 - sold in 2009 to Brisbane resident for $759,000
Apt 5701 - sold in 2012 to owner occupier for $670,000
Apt 5801 - sold in 2011 for $837,500
Apt 5901 - listed for sale at $631,000
Apt 6001 - listed for sale at $636,000
Apt 6101 - sold in 2009 to foreign investor for $829,000
Apt 6201 - sold in 2009 to foreign investor for $834,000
Apt 6301 - sold in 2009 to foreign investor for $843,000
Apt 6401 - list for sale for $651,000

Shows that there is a big risk buying off the plan, with some investors now $200,000 behind.

Inner City Apartments For Sale

Some apartments for sale in Brisbane City.

River Place, 82 Boundary Street (riverfront)
Apt 253, 1 bed plus study, 1 car park, level 28, 83 sqm, $495,000
With stamp duty - $510,750
$6,153 sqm
Rates $1,300 a year; body corporate $6,300 a year
Assume rent of $570 a week ($520 a week after agent's fees)
Net return per year - $19,440 per year before interest (3.8% return).

Apt 275, 1 bed plus study, 1 car park, 83 sqm, $505,000
With stamp duty - $521,100
$6,278 per sqm
Rates $2,200 a year; body corporate $5,950 a year
Assume rent of $570 a week ($520 a week after agent's fees)
Net return per year - $18,890 per year before interest (3.6% return).

Apt 185, 1 bed plus study, 1 car park, 81 sqm, $489,000
With stamp duty - $504,540
$6,229 per sqm
Rates $2,200 a year; body corporate $5,950 a year
Assume rent of $530 a week ($485 a week after agent's fees)
Net return per year - $17,070 per year before interest (3.4% return).

Apt 123, 2 bed 2 bath, 1 car park, 110 sqm, $689,000
With stamp duty - $713,030
$6,482 per sqm
Rates $2,447 a year; body corporate $6,600 a year
Assume rent of $660 a week ($610 a week after agent's fees)
Net return per year - $22,673 per year before interest (3.2% return).

Meriton's Soleil - new apartments (not riverfront)
Apt 5301, 2 bed 2 bath, 1 car park, 87 sqm, level 53, list price $627,000, but may discount to $615,000
Stamp duty refunded by developer
$7,068 per sqm
Rates $2,400 a year; body corporate $5,200 a year
Assume rent of $700 a week ($665 a week after agent's fees)
Net return per year - $26,980 per year before interest (4.3% return).

Assume that you can lock in an interest rate of 5.55% for 3 years (e.g., with BOQ), then you will be making a loss on all these investments after interest payments.

The above also assumes that these apartments will sell at the list price, which is an incorrect assumption, so the returns will be slightly better than stated above.