Friday, January 31, 2014

Vacancy Rate Increases for inner Brisbane

As the Queensland sales market kicks into gear, pressure on the rental market has eased according to the Real Estate Institute of Queensland (REIQ).

The REIQ Residential Rental Survey, carried out in December across all REIQ accredited agencies, found the majority of the State recording higher vacancy rates compared to the previous three months.  REIQ chairman Rob Honeycombe said that it was usual for one market to thrive more than the other.

“Over the past few years, it has been the rental sector which has been the better-performing segment of the market,” he said.  “Now while the sales market returns to healthy levels of activity after a period of subdued volumes, the rental market is experiencing a slight easing of vacancy rates after a long period of tight rental conditions. The rental market is also cyclical with January and February being the peak periods for demand.  While rental markets within the mining regions are struggling with both supply and demand imbalances, the outlook for the rest of the Queensland rental market remains positive as business returns to normal now the Christmas holidays have passed.”  

According to the survey data, over one third of REIQ member agencies reported an increase in investor activity which subsequently added stock to the rental pool.  In addition to this, the end of the year is historically a period of lower tenant demand with many vacating over the Christmas and New Year periods, usually in a move to another area for either work or educational reasons.  Over recent weeks, however, there has been an increase in enquiry and demand from tenants as is usual for January.

In the Brisbane City local government area, the vacancy rate as at the end of December was 3.2 per cent, up from 2.3 per cent at the end of September. A vacancy rate of around 3 per cent however is deemed to represent healthy levels of supply and demand.

Across Brisbane the results are varied. Inner Brisbane - suburbs within 5km of the CBD - recorded the highest increase, up 1.7 percentage points to 4.1 per cent.

“Local agents have reported a slight oversupply of rental properties with a number of new developments coming onto the market,” Mr Honeycombe said.  “Also at the end of the year we generally experience lower tenant demand as residents vacate for work transfers or the end of the university year. From mid-January, demand increases again as tenants begin their search for their new property.”  

Brisbane off the plan apartment prices expected to soften in 2015/2016

In an article in Property ObserverBIS Shrapnel is forecasting further strengthening of the off the plan apartment market in Brisbane over 2014 and 2015 before a period of softening.

"Senior project manager and report author, Angie Zigomanis, said that the inner Brisbane apartments are increasingly attractive with yields in many of these projects around the 5% mark and above.

“However, with many expecting that the Brisbane market has now bottomed out and the risk of further price declines is dissipating, the impetus to enter the market has increased,” said Zigomanis.

Price growth up until the 2015/2016 peak is expected to be around 5% per annum.

Thursday, January 30, 2014

Walter Taylor Bridge

An interesting article about the Walter Taylor Bridge at Indooroopilly, by a real estate agent, sent to me by a reader.
See here

Sunday, January 26, 2014

Selling Your Apartment

When reading a recent story in The Times (from London) titled "How to avoid house-sale hell", about a lady who went through a series of real estate agents, and taking 18 months to sell her London house in a rising market, it reminded me of many stories I have heard about bad real estate agents in Brisbane.

Some common complaints about Brisbane agents:
  • Not returning phone calls and emails.  (This always amazes me.  As as cash buyer, I often have trouble having agents return my emails when I am wanting to buy an apartment that they have listed for sale.)
  • Pushing expensive advertising packages on the seller.
  • Pushing auction sales on the seller.  For most properties, an auction is the less desirable way for the seller to sell a property, often leading to higher sales costs and a lower sales price.
  • Using a "front man" who sells the agency's services, but who is never seen again.  Young inexperienced sales agents then do the open house and deal with the buyers and sellers.
  • Having an agent give a misleading impression as to how long it will take to sell the property.
  • Listing the property at too high a price.
  • Conditioning the seller, with unreasonably low (and sometimes fake) initial offers.
Many sellers are often surprised at how few people come to inspect, and that those who do are often completely disinterested.

Saturday, January 25, 2014

Queensland Coastal Apartments - Capital Losses

RP Data recently issued is "Coastal Housing Markets - December 2013" report.

"Across the Sunshine Coast, median house values are typically most expensive in the Noosa region and most affordable between Caloundra and Maroochydore. Sunshine Beach has the most expensive median house value ($894,733) and Currimundi the most affordable at $400,631.

Median house values across the Gold Coast and Tweed Coast tend to be most expensive at the northern end of the Gold Coast. Across the region, the most expensive houses are found in Surfers Paradise ($962,563) and the most affordable are in Labrador ($392,681)."

Medium value as at September 2013 for apartments:
Noosa Heads - $528,000
Maroochydore - $323,857
Mooloolaba - $358,380
Kings Beach - $367,888
Surfers Paradise - $337,767
Broadbeach - $401,824
Palm Cove - $336,795
Port Douglas - $251,312

Number of apartment sales:
Noosa Heads - 238
Maroochydore - 404
Mooloolaba - 234
Kings Beach - 124
Surfers Paradise - 1068
Broadbeach - 418
Palm Cove - 54
Port Douglas - 270

Change in value over past 5 years
Noosa Heads -  negative 23.3%
Maroochydore - negative 17%
Mooloolaba -  negative 5.2%
Kings Beach - negative 13.7%
Surfers Paradise - negative 15.4%
Broadbeach - negative 10.5%
Palm Cove - negative 21.5%
Port Douglas - negative 13.1%

Friday, January 24, 2014

Interstate Property Buyers

The AFR had a story on page 3 on Wednesday this week: "Interstate property buyers see value in northern exposure."  Some extracts:
  • Investors from Sydney and Melbourne are flocking to Brisbane's apartment market seeking better value for money after being pushed out of increasingly expensive southern cities.
  • Brisbane developer Silverstone Developments reports that 72% of off-the-plan sales in its Vertice project at Dutton Park were sold in interstate buyers.
  • Other developers are all reporting surging interest from interstate buyers.
  • Mirvac's chief executive for residential said there was an upswing in sales of quality Brisbane properties to interstate investors due to the low rental vacancy rates and increasing rental yields in prime locations across Brisbane, as well as the price differential between Brisbane and those in southern states.
  • Since 2007, the gap in prices between Brisbane and Melbourne/Sydney has slowly opened up again.
  • Further interest in Brisbane will be contingent upon how may jobs the south-east of the state creates.
  • There is a lot more value for money in the Brisbane market, according to Metro Property Group.

Thursday, January 23, 2014

MRD Partners Book

Investment advisory group MRD Partners from the Gold Coast. has a free book, Property Investing in the post-GFC World.  It is worth reading to see MRD's positive outlook.

Tuesday, January 21, 2014

Are Auctions A Good Way to Sell Property?

From a recent RP Data submission to the Queensland Government:

We conducted some analysis of auction sales in each of these two States for the period 1 October 2012 to 30 September 2013 in order to ascertain whether or not there were any material differences in terms of outcomes between the states. For each of the auction sales in the respective states during that period, we compared the sale price with RP Data’s estimate of the subject property’s market value at the sale date, derived from our automated valuation model (“AVM ”) and utilising only those AVM estimates we deemed reliable. The percentages in the table below demonstrate, by relevant price band, the extent to which the sales price exceeds our estimate of market value. For example, for all properties sold for less than $500,000 in Queensland during this period, only 14.9% of homes were sold for a price we consider to be higher than the estimated market value of the property at that time, with the remaining 85.1% of properties sold at or below our estimated market value.

Thursday, January 9, 2014

Brisbane home prices increasing, but are still behind

Brisbane Apartment Sales Up

According to RP Data, Brisbane unit and apartment sales (that is, the number of sales) is up 16% than the same three month period a year ago.

(click on image to make bigger)
Based on RP Data’s estimates, there were 9,639 Brisbane house sales over the three months to October 2013 and 3,671 apartment sales.

Wednesday, January 8, 2014

How long does it take for property to double in value?

There is a common saying that Australian property double in value every seven years.  RP Data's recent Pain-Gain report suggests that they doubling takes longer.  And this does not take into account stamp duty and real estate agent's fees.

"Of those homes sold throughout the September 2013 quarter, those held for a short period of time have been much more susceptible to loss. Despite home values having risen over the past year, 17.6% of owners who purchased and sold in the same year, sold at a loss. The greatest proportion of loss making sales has occurred across those homes re-sold after three to five years (20.2%). If an owner wishes to double their initial outlay upon re-sale they generally need to hold the home for at least a decade. 56.2% of homes re-sold between 10 and 15 years after purchase sold for double the purchase price and 94.0% of resales after 15 years were for more than double the initial purchase price."

Thursday, January 2, 2014

Brisbane Apartment Capital Growth Summary - December 2013

From RP Data:

Brisbane apartment prices (to 31 December 2013):
Month of December 2013 - up 0.4%
Quarter - up 2.4%
Year on Year - up 3.5%
Year to Date - up 3.5%
Median price based on settled sales of Brisbane apartments over the quarter - $383,000.

Mr Kusher from RP Data said that it is clear that as the market enters 2014 and as values rise across each capital city, the rate of growth will vary greatly. He said that the main challenges in 2014 are likely to be the impact of a forecasted higher unemployment rate, affordability constraints for the more price sensitive sectors of the market (particularly in Sydney, Melbourne and Perth) and whether any regulatory changes will be implemented by APRA and the RBA to cool the near-record high levels of investment activity.

RP Data December 2013 Report

Highlights over the three months to December 2013
  • Best performing capital city: Sydney +4.1 per cent 
  • Weakest performing capital city: Canberra, -1.3 per cent 
  • Highest rental yields: Darwin houses with gross rental yield of 6.0 per cent and Darwin Units at 6.2 per cent 
  • Lowest rental yields: Melbourne houses with gross rental yield of 3.4 per cent and Melbourne units at 4.2 per cent 
  • Most expensive city: Sydney with a median dwelling price of $655,250 
  • Most affordable city: Hobart with a median dwelling price of $330,000
Each capital city housing market recorded positive home value growth in 2013, however, the cities driving the capital growth have been Sydney (14.5%), Perth (9.9%) and Melbourne (8.5%). Brisbane was the only other city to record value growth in excess of 5 per cent (5.1%) with each of the remaining capital cities recording annual value growth of 3.5 per cent or less.

Brisbane – house values have increased by 5.3 per cent over 2013 compared to a 3.5 per cent increase in unit values. Value growth has only slightly outpaced rental growth however it has resulted in gross house yields falling from 4.7 per cent a year ago to 4.6 per cent currently and unit yields easing from 5.6 per cent to 5.5 per cent.

Wednesday, January 1, 2014

Pradella developments

Pradella has a number of apartment developments in Brisbane that are currently being marketed.  These include:

Riverside, West End
1 bedrooms from $400,000
2 bedrooms from $540,000
3 bedrooms from $929,000
These apartments will be located behind the Waters Edge complex.  Project website.

Skyview, Kelvin Grove
1 bedrooms from $335,000
2 bedrooms from $524,000
3 bedrooms from $789,000
Settlement expected late 2014.

Canvas, South Brisbane
1 bedrooms from $346,000
2 bedrooms from $575,000
Settlement expected mid 2014.

Urban Edge, Kelvin Grove -- development completed
1 bedrooms from $429,000
2 bedrooms from $539,000

Waters Edge, West End -- development completed
2 bedrooms from $600,000
3 bedrooms from $889,000

Parklands at Sherwood - development completed
from $395,000

Infinity Brisbane by Meriton

Meriton's Infinity tower in Brisbane is now at its full height -- 81 levels -- and is now the tallest tower in Brisbane.  The internal fit out in the upper levels is not complete.  Lower levels are being occupied.  Meriton is selling apartments up to level 64.

A two bedroom, two bathroom, 1 car apartment in the middle for the building will sell for around $665,000.  These apartments are being offered for rent at $690 a week.  No balcony.  Internal size is 86sqm to 90sqm, which is not large.  I suspect many of the buyers are not Australian residents.

The Glass Factory Apartments in West End - Sold Out

CBRE was marketing The Glass Factory at West End.  It is reported as being sold out.  The current website states:

"West End’s fastest selling boutique development is now 100% SOLD.  After an incredible response from the market, the limited opportunity to purchase an apartment within The Glass Factory has passed."

Here is a price list from August 2013:

Apple Store Comes to Brisbane City

As previously reported in this blog 20 months ago, an Apple Store is coming to the Brisbane City.  It will be in MacArthur Chambers, the site of Douglas MacArthur's headquarters, and most recently a Dymocks bookstore.

Recent Sales in Brisbane's Admiralty Precinct

Admiralty Towers One (35 Howard Street)
  • Apt 93, 2 bedrooms, 2 bathrooms, 2 car parks - sold in September for $880,000
  • Apt 58, 2 bedrooms, 2 bathrooms, 1 car park - sold in September for $900,000
Admiralty Towers Two (501 Queen Street)
  • Apt 108, 3 bedrooms - sold in September for $938,000
  • Apt 132, 2 bedrooms - sold in August for $760,000
  • Apt 26, 2 bedrooms - sold in July for $662,000
Admiralty Quays (32 Macrossan Street)
  • Apt 100, 2 bedroom 2 bathroom - sold in October for $800,000
  • Apt 12, 1 bedroom - sold in August for $590,000
Skyline (30 Macrossan Street - not riverfront)
  • Apt 125, 1 bedroom, 1 car - sold in December for $347,000
  • Apt 13, 3 bedroom - sold in October for $1,131,000
  • Apt 172 - 2 bedrooms - sold in July for $590,000
Riverplace (82 Boundary St)
  • Apt 215, 1 bedroom - sold in December for $510,000
  • Apt 140, 1 bedroom - sold in November for $435,000
  • Apt 316, 2 bedrooms - sold in October for $750,000
  • Apt 54, 2 bedrooms - sold in October for $647,000
  • Apt 146, 1 bedroom - sold in September for $370,000