Monday, May 22, 2017

New Depreciation Rules only apply to properties purchased after 9 May 2017

Under the new rules which are yet to be legislated by Parliament, investors will be able to depreciate new plant and equipment assets within a new property and items they add to their property; however subsequent owners who acquire a property after 9 May 2017 will not be able to claim depreciation on existing plant and equipment assets.
Investors will still be able to claim qualifying capital works deductions, including any additional capital works carried out by themselves or a previous owner.
See also BMT blog

Monday, May 15, 2017

Five months supply

A report from RP Data CoreLogic today says that there is about 5 months supply of property for sale in Brisbane.  This does not include off the plan properties that are for sale.
The months of supply figure compares the number of unique properties advertised for sale to the number of transactions in the market.  The analysis provides an insight into how long it should take to clear the volume of stock currently available for sale.  Off-the-plan housing stock is typically not advertised for sale as individual properties and as a result is not included within this analysis.
Based on the relationship between demonstrated housing demand and advertised stock levels, CoreLogic is seeing relatively more stock available for sale compared to demand for that stock across the capital cities at the moment.

Sunday, May 14, 2017

Sunland Abian Apartment Resales on Alice Street

Sunland is in the final stages of completing Abian on Alice Street, in Brisbane city.  The building is high end residential, overlooking the Brisbane Botanical Gardens.  Settlement of new, off-the-plan apartments, is planned for June.

Sunland reports that the development is sold out.  A few apartments are available for resale:
  • Apt 404, 4th floor, 1 bed, 1 study, 2 cars, 84 sqm, $695,000
  • Apt 1204, 12th floor, 2 bed, 2 bathrooms, 2 cars, 112 sqm, $1.3 million
  • Apt 1603, 16 floor, 3 bed, 3 bath, 2 cars, 225 sqm, $2.7 million
  • Apt 2703, 27th floor, 3 bed, 2 bath, 2 cars, 225 sqm, $2.7 million
The larger apartments are about $12,000 a sqm.

Next door, is Quay West, built by Mirvac about 20 years ago.  It is interesting to compare recent sales in Quay West.  For example, Lot 60, which is 1 bed, 1 bath, 1 car on about level 10, at 75 sqm, sold in January for $500,000.  Lot 102, which is the same apartment on a higher floor, sold late last year for $513,000.

  • Apt 2102 on the 21st floor is up for auction, which will be a good guide to market price.
  • Apt 1203, 12th floor, 1 bed, 1 bath, 1 car, 75 sqm is listed for sale fully furnished at $510,000
  • See also Apt 2001
The Quay West apartments are less than $7,000 a sqm.

It will be interesting to see whether the Quay West apartments increase in value or the Abian decrease in value.  Abian, being newer, should have higher values than Quay West, but nearly double the value is hard to explain.

Saturday, May 6, 2017


From RP Data CoreLogic:

There’s a lot of uncertainty in the property market right now.

On the one hand property has boomed in Sydney and Melbourne triggering concerns of overvaluations and a property bubble.

On the other hand property has dropped in Brisbane (down 9.1% from its 2008 peak) and Perth (down 18.5% from its 2007 peak) because of a mining downturn.

Wednesday, May 3, 2017

Jack Russell beats the body corporate

The body corporate adjudicator recently allowed a dog to reside in an apartment, even though a number of apartments in the building were used for short term or holiday rentals.

See The Mirage [2017].

"Pets are not necessarily incompatible with high density living. No evidence has been provided that this dog is inherently unsuited to predominantly indoor living.

While it is not possible to determine the basis upon which owners in general meeting voted against motion 11, submissions by the committee and two lot owners raised hypothetical concerns. In particular they are concerned that if the dog barks, the body corporate would not be able to take enforcement action, because the applicants only stay in their unit for one or two weeks per year. In my view it is unreasonable to refuse permission to keep a pet based on hypothetical concerns, without a cogent basis to believe the animal will actually cause problems or the lot owner will not comply with conditions of approval. It is appropriate to impose conditions to avoid problems arising, and to withdraw approval if those conditions are not met.

Similarly, it is difficult to see how the body corporate would not be able to take enforcement action in the event that the applicants’ dog causes a nuisance. While there may be a time delay between when a breach of the conditions occurs, and taking of enforcement action, I do not believe this means that the conditions of approval cannot be enforced against the applicants. The applicants are the owners of unit 25, they stay in unit 25 whenever they visit the scheme and the requested approval relates to the keeping of a dog in unit 25 only. It stands to reason that if the applicants are in breach of the conditions of approval, then the body corporate could withdraw the approval and they would not be able to bring their pet dog into the scheme on future visits to their unit. 

While I note the concerns raised by the owners of unit 45 regarding temporary or short term approvals, any such approval must be given by the body corporate in general meeting in accordance with by-law 11. Further, there is no legal basis for owners to be forced to allow short or long-term tenants to keep a pet in their lot. Even if the Body Corporate approves dogs generally, or in a specific case, a tenant still requires the approval of the lot owner under normal tenancy arrangements. If owners in the letting pool do not want dogs in their lots, they do not have to allow them. Potentially the building manager could decline to accept lots in the letting pool where pets are allowed in that lot."

Tuesday, May 2, 2017

Recent Brisbane City Apartment Sales

M on Mary
Apt 1506, 1 bed, 1 bath, no car - $310,000

Charlotte Towers
Apt 4011, 1 bed, 1 bath, 1 car - $390,000
Apt 2804, 1 bed, 1 bath, no car - $311,000
Apt 3602 - 1 bed, 1 bath, 1 car - $410,000

Casino Towers
Apt 2306, 1 bed, 1 bath, no car - $310,000

Apt 277, 2 bed, 2 bath, 1 car - $600,000
Apt 157, 2 bed, 1 bath, 1 car - $552,000
Apt 175, 2 bed, 1 bath, 1 car - $552,500
Apt 234, 2 bed, 2 bath, 1 car - $772,000

Apt 528, 2 bed, 2 bath, 2 car - $808,000

Admiralty Towers Two
Apt 3, 3 bed, 2 bath, 2 car - $975,000
Apt 95, 3 bed, 2 bath, 2 car - $1,350,000
Apt 100, 2 bed, 2 bath, 1 car - $730,000

Apt 216, 2 bed, 2 bath, 1 car - $520,000

Admiralty Quays
Apt 49, 3 bed, 2 bath, 2 car - $1,075,000

More the most part, these prices are similar to prices that were being achieved 7 years ago.  Riverplace has had the biggest increase in value over this period.

Monday, May 1, 2017

Brisbane Apartment Prices in Freefall

The latest CoreLogic report, issued today, shows that the prices of Brisbane apartments are falling, dramatically.

Brisbane apartment prices (to 30 April 2017)
April 2017 - down 3.1%
Quarter - down 1.9%
Year to Date - down 2.1%
Year on Year - down 3.1% 
Median price based on settled sales of Brisbane apartments over the quarter - $400,000

A 3% decline on a $500,000 apartment is a loss of $15,000.

Rents are also dropping, on my rough calculation by about 5%.

Brisbane apartment sales slow

The AFR on 27 April 2017 had a story on page 39 about apartment sales slowing in Brisbane and Melbourne.  "Slower off-theplan apartment sales in Melbourne and Brisbane have resulted in fewer projects staring construction, a sign the apartment markets in these two cities may have peaked."

The story says Brisbane is worse than Sydney and Melbourne.  "While it has 11,000 units due to be completed between late 2017 and 2022, current pre-sales of apartments have slowed forcing developers to abandon projects.  ... Only 52% of the 5,897 apartments currently marketed have been pre-sold."

There is good news.  "Despite many off-the-plan sales having extended settlement periods, this has not translated into substantial settlement failure across the market.  However, projects completed later int he cycle may be exposed to higher levels of settlement risk than those approaching completion."