Tuesday, February 27, 2018

Brisbane property prices to improve?

Brisbane is well placed to take over as the best performing capital city housing market over the next five years.  Dwelling values across Australia’s third largest capital city have risen at the annual rate of 1.2% of the past decade; that’s half the pace of inflation and dramatically lower than Sydney or Melbourne where annual gains have averaged 6.3% and 5.9% over the past ten years.

Importantly, there are a variety of economic and demographic factors that are likely to support improving market conditions across Brisbane including economic and demographic trends as well as a worsening performance across the larger cities of Sydney and Melbourne which will provide a lower relative benchmark for Brisbane.

Although Brisbane looks primed to experience an improvement in housing market conditions over coming years, I wouldn’t necessarily expect that the rate of growth in Brisbane will reach the heights of those experienced in Sydney and Melbourne over recent years.

See https://www.corelogic.com.au/news/could-brisbane-take-over-best-performing-capital-city-housing-market-5-years

Monday, February 26, 2018

No surprise - Brisbane apartments cheaper than Sydney

Sydney apartments are way more expensive than apartments in Brisbane.

Sydney’s median apartment value currently sits 98.3% higher than Brisbane’s median apartment value, which is the largest premium since late 2002.  The average premium for a Sydney apartment over Brisbane has been recorded at 54.1%.

Does this mean that Brisbane apartment values will rise as a result of this difference?  CoreLogic does not think so:

"We would expect the Sydney premium to reduce over the coming years as values decline however, we also believe that historical premiums for Sydney relative to other capital cities don’t reflect the likely differentials in the cost of housing going forward.  That is to say we expect that the cost of housing in Sydney and Melbourne will continue to be higher relative to other capital cities than it has been in the past."

See CoreLogic Report

Sunday, February 25, 2018

West Village in West End

The West Village development in Boundary St, West End is being heavily marketed at present.

Is this a good place to invest?  I have a number of concerns:
  • The development consists of 11 new apartment buildings, going as high as 22 storeys, with a huge number of new apartments.  It is being developed and sold in stages, with the first two buildings settling at the end of 2018.  If you buy today, not only will you be living near a construction site for years, you will be competing with new apartments as they come online over the next few years.  Hard to resell or rent in this situation.
  • In my opinion, the apartments do not appear to be high quality.  For example, in the two bedroom apartments, the second bedroom is not air-conditioned.  The air-conditioning is not a central system, but a split system with unsightly head ends on the wall.  
  • Most of the bedrooms do not have large windows -- they appear to have one tiny window, and I suspect they will be dark and feel pokey.
  • The bathrooms are small.  (None have a separate bath -- compare Saville Southbank by comparison.)
  • Most bedrooms don't have access to the balcony.  Of itself, this is not an issue, but it makes both the bedroom dark (and for the smaller apartments, the balcony will be dark and alley-like). 
  • The apartment layouts are troubling.  For example, in 1 bedroom apartments, the bathroom is a long way from the bedroom, through the kitchen.  For most two bedroom apartments, the second bedroom is too close to the main bedroom and too far from the bathroom.   
  • The prices are expensive!  For example, a one bedroom apartment is selling for $467,000 on a low floor.  This apartment is 54 sqm internal.   (The balconies are long and skinny, with an air-conditioning compressor on the balcony.  The apartment, especially the kitchen, is likely to be dark.)
  • The 3 bedrooms are being sold for more than $1.6M.  Small two bedroom apartments (only 84 sqm internal) start at $700,000!

    The design is such that you can't even put a sofa in front of the TV!

    It is worth comparing the West Village apartment with a similar recent development nearby, for example, Opera on Cordelia Street that settled about 6 months ago.  A similar size brand new one bedroom in Opera, which I feel is a better quality development is a better location, recently sold for $415,000 on a midlevel floor.  A floor plan for the Opera apartment is below.  When you compare the apartments side by side, you can see that the Opera living room space is bigger, and the design is better.  Opera even has a walk-in wardrobe and a separate laundry, plus more storage cupboards, and an island kitchen bench.  (It is also better quality, for example, deducted air conditioning.)

    So make sure you compare what is currently happening in the market, for existing apartments, before buying in a risky new off-the-plan development.

    Wednesday, February 14, 2018

    Is there an oversupply of apartments in Brisbane?

    "Brisbane’s high-rise apartments have been growing at a rate of 34% to 43% each census since 2001. This year alone, Brisbane has had 9,000 new apartments supplied, which is a massive 200% increase since 2015. As a result, Brisbane currently has a huge supply of new apartments, and is evidently oversupplied in popular inner-city suburbs such as Fortitude Valley, Newstead and West End.

    However, over the past 12 months, there has been a large reduction in apartment building approvals as more developers have become fearful of the current market. At the moment, 38% of projects with development approval have been deferred indefinitely. Larger developers are even opting to land bank and sell existing projects as they fear getting stuck with a partial apartment development. This is now contributing to Brisbane’s stalling apartment price growth in the densely populated suburbs."

    Friday, February 2, 2018

    Vacancy Rate of Brisbane Apartments

    The vacancy rate of inner city Brisbane property has increased to above 4%.  This is regarded as being unhealthy for landlords.  Rents are decreasing - and tenants are asking for rent reductions on renewals.

    See http://www.beesnees.com.au/2018/02/brisbanes-rental-vacancy-rate-4/