Brisbane Apartment

South Bank to Expand?

2012-02-12T11:10:00.002+10:00

The Queensland State government plans to expand South Bank upriver, and into South Brisbane & West End. This will involve the purchase of the Parmalat milk premises. See story here.

"The South Bank Corporation would oversee the expansion of the parklands precinct from 42ha to 69ha.It would include a 50m pool and aquatic play area, green space, picnic and barbecue areas, markets and a retail and dining precinct. There would also be new commercial and residential buildings to offset the cost of public infrastructure. Ms Bligh said one of the features of South Bank 2 would be a new cultural institution, with a national indigenous museum favoured by authorities. She said the plan envisaged Hope St and Montague Rd becoming "vibrant destinations" similar to James St in Fortitude Valley and Little Stanley St in South Brisbane."

It looks like a great plan. But if the government changes at the next election, this is unlikely to go ahead because Campbell Newman said that he wants to abolish South Bank Corporation.

Academic Says Housing Market is Ponzi Scheme

2012-02-12T02:30:00.000+10:00

According to Soos, the tipping point for the mark will come when “the household sector is so overloaded with debt there exist no more ‘greater fools’ willing to commit to a lifetime of debt serfdom to purchase property”.

“With few buyers and many sellers, prices stagnate then rapidly fall as assets are unloaded en masse onto the market. With demand falling in the housing sector, coupled to an inevitable increase in unemployment, a vicious deflationary spiral occurs. Economy activity grinds to a halt.”

See article in Property Observer

Savill's view of Brisbane

2012-02-11T01:00:00.000+10:00

"There is demand at the moment. There is going to be some rental growth, certainly in the CBD and fringe and I think the unknown is in the investment market what's going to happen there.

"The credit squeeze is still on, we know that. It's very tough to get finance. It's very tough to get funding for development. But I think there is some light at the end of the tunnel in that regard."

Courier Mail

DoubleOne3 by Devine

2012-02-10T02:00:00.000+10:00

Devine reports that development approval has been received for a 111 apartmentproject at Teneriffe, Brisbane. The project, known asDoubleOne3, will be launched to the market in lateFebruary 2012. If you preregister, you will receive a free double expresso!

"There’s only one Teneriffe. And there’s only one DoubleOne 3. When you put the two together you get the double effect of sleek modern living in the midst of historic charm. A dynamic duo indeed. One bedroom apartments with secure carpark start from $370,000. Be doubly quick."

Failed Settlements At Hamilton Harbour

2012-02-09T21:38:00.000+10:00

Devine reports that as at 8 February, 384 settlements had occurred for the apartments in Towers 1 and 2 at Hamilton Harbour.

Devine also reported to the ASX this week the following information:

Hamilton Harbour (Towers One &Two) settlementscommenced with 85% of contracted pre-sales settled prior to31 December 2011
This strong completion result is testimony to the qualityoutcome at Hamilton Harbour
Sales activity within the third residential tower hasimproved and continues into 2012.

I think it is somewhat funny that Devine thinks that a settlement rate of 85% is a strong result. Maybe there were expecting a lot worse. There are 469 apartments in total in Towers One & Two. So assuming that all have sold, this means that 70 buyers did not settle. That is a large number of contracts to crash.

Why buy in the third tower, when you have a choice of 70 failed contracts in the first and second towers?

Extent of Losses

2012-02-08T22:40:00.000+10:00

RP Data reported recently that Brisbane apartments in 2011 lost value of 6.5% (when looking a medium sales prices of apartments that actually sold in 2011).

Let's assume Mr Investor purchased a Brisbane apartment on 31 December 2010 as an investment for $485,000. Assume that he borrowed 80% of the purchase price, including stamp duty. Stamp duty is $14,850. So the total purchase cost, including legal fees and bank fees, is just over $500,000. Mr Investor put in $100,000 of his own money, and borrowed $400,000.

That apartment, if it went down 6.5% in value, is now worth $453,475. That is a capital loss of $46,525.

So Mr Investor has had a capital loss of over 46% in one year. That is the risk of leveraging. A small decrease in value means a large capital loss where there is a leverage situation. (If Mr Investor had to sell, he would pay over $10,000 in real estate agent fees, making his capital loss even greater.) If values decrease further, Mr Investor will be completely underwater. I suspect that there are many apartment owners in Brisbane who have little or no equity left.

Pradella's New Project - Canvas

2012-02-05T11:28:00.000+10:00

Pradella is advertising a new project in South Brisbane, called Canvas. It is a high-rise building, having one and two bedroom apartments. The development is located at 41 Boundary Street, and will have 141 apartments over 11 levels.

Devine Hamilton Harbour Settlements

2012-02-05T11:09:00.000+10:00

Devine recently issued a stock market release saying:

"Market conditions have continued to deteriorate across most Australian property markets whichhave had a significant impact on the company bringing new projects to the market."

In Brisbane, Devine has a joint venture with Leightons on a multi-building apartment complex called Hamilton Harbour, where most off-the-plan sales for buildings one and two have reached settlement.

According to the AFR this week, as at late December, Devine had settled 80% of the off-the-plan sales. Why have 20% not settled? All may be revealed when Devine's financial results are released shortly. If 20% of the sales have fallen over, this may impact nearby developments by Brookfield Multiplex, Mirvac and Citimark.

Devine has a rental website for the project, advertising two bedroom apartments for rent from $545 per week. But some two bedroom apartments are listed on RealEstate.com.au for $795 a week, which seems outrageously high for a 85 sqm apartment facing West.

RP Data December 2011 Index

2012-02-05T10:47:00.004+10:00

"On the outlook for the year ahead, Rismark’s Ben Skilbeck commented, “We expect that the RBA’s interest rate cuts in the final two months of 2011 will lend further momentum to housing activity as transaction volumes pick up over February and March after the seasonally slow months of December and January. If financial market pricing for substantial additional RBA rate cuts proves accurate, we could see a stronger-than-expected bounce-back in housing conditions.”

“Housing affordability in Australia has experienced a striking improvement in recent times. While disposable household incomes on a per household basis rose by five per cent over the year to September 2011, Australian dwelling values have declined by 3.4 per cent since September 2010. As a result of the RBA’s rate cuts borrowers can now get fixed- and variable-rate home loans as low as 5.9 per cent and 6.14 per cent. Rismark’s research shows that disposable incomes per household have risen about 15 per cent further than Australian dwelling values since the end of 2003. This helps account for the decline in Rismark’s national dwelling price-to-income ratio, which is as low as its been since 2003” Mr Skilbeck said.

RP Data’s Tim Lawless added, “While global uncertainty and a stagnant local labour market could weigh on the consumer’s mindset, we are nevertheless observing improvements in monthly housing finance commitments. RP Data’s leading indicators on average selling times and vendor discounts are also starting to look healthier. There is no doubt that additional interest rate relief in 2012 would afford a very welcome cushion to the housing market.”"

See RP Data. Chart above from RP Data, for Apartments only (not houses) for period ending December 2011. It shows a decline in Brisbane apartment prices for all relevant periods.

Mosaic Apartment Complex to Become Grand Chifley Hotel

2012-02-03T02:30:00.000+10:00

The Mosaic Apartment complex in the Valley will include a Grand Chifley Hotel. I hope that the building is constructed to comply with all the proper fire regulations for a hotel.
Story here.

Alderley Square on hold

2012-02-02T22:12:00.002+10:00

PCN's Alderley Square project is on-hold. See Quest story. PCN's El Dorado Indooroopilly project seems to have stalled.

There are a number of other projects where the developer is trying to off-load the whole project to another developer. Buyers beware!

Brisbane Rentals

2012-01-30T03:00:00.000+10:00

According to SQM Research, the Brisbane rental market is tightening, with less advertised vacancies than this time last year. See note.

Grey Street, South Bank

2012-01-29T16:51:00.000+10:00

Part of Grey Street at South Bank (South Brisbane) is getting a major and needed facelift.

The new ABC headquarters are almost complete.
The new entrance and shops at the Convention Centre are complete and have opened.
The Queensland Conservatorium has done minor improvements to the streets cape -- more work is needed here.
The Rydges Hotel is improving its street front.
The South Brisbane train station landscaping and heritage features are being improved.

All of these improvements add value to the apartments on Grey Street (such as Saville and Arbour).

Hamilton Reach Press Release

2012-01-27T21:25:00.000+10:00

Diversified property group Australand is poised to begin construction on one of Brisbane’s most anticipated new residential projects – the $400 million Hamilton Reach in the Northshore Riverside precinct.
Following a successful sales run equating to more than 60 percent of available product, Australand is about to start work on The Green Quarter – the second release at Hamilton Reach since its launch in April 2011.
The Green Quarter – comprising 12 unique terrace homes located just one street back from the Brisbane River is anticipated to be completed late 2012.
“Hamilton Reach has generated a high level of interest due to its sought-after low to medium density masterplan, diverse and considered product and its unrivalled riverfront location,” he said. “The project has been designed as a highly liveable community optimising views to the river and parklands. Hamilton Reach will be intrinsically different to anything else in the area as it has been designed as a boutique enclave that is spaced out over a number of low rise buildings which have been extremely well received.”
ULDA urban development director, Matt Leyshon, said Northshore Hamilton is currently undergoing the biggest urban renewal in Brisbane’s history and Australand’s Hamilton Reach is a significant part of the precinct’s transformation.
“Northshore Hamilton is the most significant waterfront redevelopment in Brisbane since Expo 88 and Southbank,” he said.
Watermarque features a stunning collection of 78 contemporary apartments across two five-storey buildings. There are a variety of floor plans with one, two and three-bedroom configurations on offer ranging in size from 56 sqm to 333 sqm.
The Green Quarter’s terrace homes will be built according to stringent design and construction standards in a bid to reduce the future energy costs for the end user.
Designed by Rothe Loweman White Architecture, the terrace homes will feature a 3 kilowatt solar power system, double glazing to windows and doors, cross ventilation, a 3000-litre rainwater tank plumbed to the toilets and laundry, private courtyards and smart meters to monitor water and electricity usage.
The terrace homes range in size from 193sqm to 280sqm and remaining homes are priced from $925,000 - $1.375 million. Watermarque apartments are selling from $535,000 - $950,000.

Project Marketing Blog

2012-01-25T06:30:00.000+10:00

A new blog has recently been launched by Colliers Real Estate dealing with project marketing. That is, marketing a real estate project, such as an off-the-plan apartment building. See Project Blog

High-rise Dangers For Children

2012-01-24T20:50:00.000+10:00

"Balconies are definitely a safety issue and no doubt the battle over how to make them safer hasn't finished yet. But at least with balconies, people know they are dangerous.

Windows, on the other hand, are a silent risk – as many people mistakenly assume that if a flyscreen is fitted, children are "contained".

It's not just an issue in Australia – see this story from the US where despite tough building codes in New York – there are thousands of falls across the rest of country, where legislation is lacking.

It's about time we all took some responsibility for some of the most vulnerable people in our society – our children. I mean "our" in the collective sense."

See Fairfax Media story

Renting Is the Gateway to Financial Success

2012-01-24T20:44:00.000+10:00

“The bills were endless. There's the rates, the utilities and also the insurance for the property,” Klemencic said.The Klemencics sold up, investing the proceeds in shares, and returned to the rental market.“We save about $600 per month easily in renting rather than buying,” she said.
See Today Tonight story

Indooroopilly Shopping Centre Expansion

2012-01-22T20:47:00.002+10:00

Indooroopilly shopping centre is set for a major facelift, with a $450 million expansion receiving the green light from planning authorities.Eureka Funds Management, which manages the superannuation trust that holds a 50 per cent stake in the centre, announced today that development approval had been obtained and work had started on the 30,000 square metre addition.Construction company Brookfield Multiplex is expected the finish the work by April 2014.
Full Story Here.

In addition, apartment buildings up to 20 storeys will be allowed near Indooroopilly shopping centre and Indooroopilly train station under a draft neighbourhood plan passed by Brisbane City Council in December.
Full Story Here.

These changes will probably have a negative impact on those apartments very close to the shopping centre, such as those on upper Station Road, on Belgrave Road and on Grosvenor Road. But for those apartments a little further away from the shopping centre, it will be a positive addition and will add further value to those apartments.

Soleil Review

2012-01-21T16:56:00.002+10:00

I recently visited an apartment in Soleil, which is in the Meriton pool. Meriton is running a short term rental business out of Soleil, and so the ground floor lobby looked more like that of a cheap hotel than a residential apartment building.

I visited a one bedroom apartment. It was very small. Basically, two rooms. A small bedroom, and a living room with a kitchen along the wall. So really, a bedroom and a kitchen. The kitchen/living room/dining room was very crowded even with the minimal hotel furniture. You were sitting very close to the TV when on the sofa.

There are no balconies, and the windows only partly open.

No ducted airconditioning. There is a split system, with an ugly head-end in the living room.

There were strange bangs and mysterious deep noises coming from the walls and the common hallway areas. I could not determine what these noises were, but they were very annoying.

Overall, my opinion is not positive. I was very unimpressed.

The building has a Facebook page, if you want to become friends with this apartment building.

Home Equity

2012-01-20T18:21:00.001+10:00

A summary from the recent September 2011 Quarter RP Data home equity report.

The highlights of the report are:

Over the five years to September 2011, capital city home values increased by around 28 per cent.
Australian housing markets recorded value declines recently with capital city home values down 3.3 per cent from their October 2010 peak to September 2011.
Properties in Queensland and South Australia have higher turnover rates; therefore equity levels in these states tend to be lower than in other states.
Far North Queensland & the Gold and Sunshine Coasts have the highest instances of negative equity at 20.2%, 14.0% and 13.5% respectively.
The highest proportion of homes that are now worth at least double their initial purchase price is typically either regional and non-coastal, or capital city markets.
Capital cities have enjoyed long-term value appreciation and have proven to be less susceptible to ongoing value falls than certain non-capital city markets.

Juniper's Soul

2012-01-20T18:16:00.000+10:00

It is hard to tell, but it appears that only about a third of the apartments purchased off the plan in the first stage of the Soul tower at Surfers Paradise have settled. Juniper, the developer, must not be happy about this.

Brisbane real estate transaction volumes below average

2012-01-20T03:00:00.000+10:00

Brisbane home values continue to fall

2012-01-19T07:00:00.000+10:00

Summary of Recent RP Data report

2012-01-18T08:30:00.000+10:00

Housing values record their first monthly increase since December 2010 in November 2011

Capital city dwelling values up 0.1% over the month of November, the first monthly increase since December 2010. Dwelling values are down -3.5% over the twelve months to November 2011.
Home values in Melbourne and Brisbane fell by the most significant amount over the quarter, both down by -1.7%, followed by Adelaide and Perth which both fell by -0.3%.

National sales volumes are tracking about 17% below the five year average.

· In recent months the estimated number of dwelling transactions has remained quite stable. Based on our estimates of October transaction numbers, every capital city except Sydney (+8%) is recording lower than average home sale numbers.

· The worst hit markets are Melbourne (-32% below average) and Darwin (-30% below average).

Rents are starting to improve in certain areas and across certain product types while yields continue to improve.
Capital city house rents have increased by 4.9% over the 12 months to November 2011, compared to average annual growth over the past five years of 5.8%.
Capital city unit rents have increased by 5.4% over the 12 months to November 2011, compared to average annual growth over the past five years of 6.6%.
Gross rental yields for houses have improved from 3.9% last November to 4.3% currently and for units they have increased to 5.0% from 4.7% last year.

Homes are taking longer to sell and vendors are providing large discounts on their price expectations however, conditions have shown improvement over recent months.

· The average number of days it takes to sell a house has decreased over recent two months. It currently takes 53 days on average to sell a capital city house compared with 46 days at the same time last year.

· Vendors are now providing an average discount of -6.9% from their initial listings price, at the same time last year the average vendor discount across the capital cities was recorded at -5.9%.

Blue Sky Ahead?

2012-01-17T21:33:00.000+10:00

John Edwards at Residex believes that there is blue sky ahead for the Australian residential property market. A quote from a blog entry from today:

"Adverse comments and the position currently surrounding European economic problems have certainly had an impact on Australia’s economy; however it is important to recognise the position Australia holds, and that if things do go horribly wrong, Australia has the capacity to simulate its economy by increasing borrowings and decreasing interest rates.

Our housing markets ended 2011 in a better position to where they started and I am confident that the year ahead will be better for residential property owners compared to last year. Most owners should see their assets hold value or increase and this year could in fact be a good time for investor activity provided the world economy doesn’t move into severe recession as a consequence of the problems in Europe. ...

The data suggests that we are exiting a period of negative adjustment however, in my view, we should not expect any rapid uplift in housing values because current economic conditions are not capable of supporting strong consumer activity. Retail activity during the Christmas period certainly suggests that consumers are cautious."

Busting Bubble?

2012-01-16T22:18:00.001+10:00

According to contrarian economist Professor Steve Keen, it was accelerating debt that drove house prices up and it is decelerating debt that is causing the fall.

Keen has argued the significance of private debt in the economy - something which mainstream economists largely ignore. In a recent post on his blog, debtdeflation.com, Keen reveals the debt to disposable income ratio for Australian households has been rising until recently. Now Australians are saving and paying off debt rather than spending and this has a negative impact on house prices.

The end result, Keen argues, is that house prices will fall 40 per cent over the next 10 or so years, or 5 per cent to 10 per cent for 2012.

See Courier Mail and Property Observer

But see a contrary story here and story by Matusik. Chris Joye from Rismark takes the opposite view.

Chinese Investors

2012-01-16T12:30:00.000+10:00

"And buyers from China once again topped the list, according to new research by Colliers International. The figures on buying patterns during the 2010-2011 financial year have shown 733 residential sales to foreign buyers. In all, 506 of those sales were investments with 277 for owner-occupiers."

See Courier Mail

Gold Coast Still Oversupplied

2012-01-16T05:00:00.000+10:00

"The high-rise market on the Gold Coast is nothing like any other Australian market.

"It's a unique market and it's driven by speculation and not necessarily the fundamentals. But we just don't need any more high-rise developments for the moment.''

Mr Morris said his latest research indicated there were 625 new high-rise apartments for sale on the Coast. That represented a 2 1/2-year supply based on the average sales rate over the past two years.

"But the figure is a bit camouflaged by a rather big project in Southport - Philip Usher Constructions' $200 million H20 on Broadwater development, which is completed, but has not yet been put to the market.

"So there's another 350 apartments just sitting there which, when they get released for sale will add another year to supply, increasing it to 3 1/2 years.''

In the wake of the GFC, the Gold Coast high-rise apartment market has been hit by spiralling valuations and two high-profile victims of receivership, Southport Central and the twin-tower The Oracle Broadbeach.

It has led to heavy discounting of stock, with prices of some luxury apartments slashed by as much as 30 per cent.

But Mr Morris believed prices could fall even further throughout 2012.

"Most of the stock on the Gold Coast is held by receivers and the prices are not being driven by the market.

They're being driven by what the receivers have to do to get rid of the debt,'' he said. ``So it's quite possible the average price of new apartments could sink below the average price of resale stock.''

Research by the Oliver Hume Real Estate Group shows the Coast's total supply of available apartments - low, medium and high-rise - has reached 1626, down from its peak of more than 2000 over the past couple of years. And the figure is expected to continue to fall with predictions of the strongest summer sales since the GFC.

See Full Story

Recent Brisbane City Apartment Sales

2012-01-15T17:53:00.001+10:00

Here are the recent reported apartment sales in the larger Brisbane downtown buildings. Most of these sales closed in the period from late October to early December 2011.

Charlotte Towers

Apt 2110, 1 bed, 1 bath, 1 car - $382,000

Aurora

Apt 393, 2 bed, 2 bath, 1 car - $665,000
Apt 236, 2 bed, 2 bath, 1 car - $515,000
Apt 512, 2 bed, 1 bath, 1 car - $582,000

Festival Towers

Apt 3401, 2 bed, 2 bath, 1 car - $475,000
Apt 1707, 2 bed, 2 bath, 1 car - $440,000
Apt 2110, 1 bed, 1 bath, ? car - $350,000

Felix

Apt 356, 2 bed, 2 bath, 1 car - $505,000
Apt 276, 2 bed, 1 bath, 1 car - $492,000

River Place (82 Boundary Street)

Apt 302, 2 bed, 2 bath, 1 car - $690,000
Apt 326, 3 bed, 2 bath, 2 car - $1,497,000
Apt 231, 2 bed, 1 bath, 1 car - $423,000
Apt 110, 1 bed, 1 bath, 1 car - $410,000

Skyline

Apt 55, 1 bed - $320,000
Apt 131, 3 bed, 2 bath, 1 car - $700,000

Admiralty Quays

Apt 9, 3 bed, 2 bath, 1 car - $900,000
Apt 67, 1 bed, 1 bath, 1 car - $580,000
Apt 135, 2 bed, 2 bath, 1 car - $780,000

Admiralty Towers Two

Apt 57, 2 bed, 2 bath, 1 car (103 sqm) - $660,000

No reported recent sales (last October to early December) in Casino Towers, Quay West or Admiralty Towers One.

Brisbane Market Flat, and therefore good buying?

2012-01-15T17:15:00.001+10:00

With the market remaining soft most of last year, Mr Lawless said Brisbane was again becoming more affordable compared to other capital cities.

There had not been such disparity between Brisbane and Sydney prices since 2007 and Melbourne since 2004.

"It just demonstrates that there is quite a strong value proposition opening up within the Brisbane marketplace,'' he said. "Which should make the Brisbane market look much more attractive to investors and also interstate migrants.''
See Courier Mail

South Brisbane and Indooroopilly

2012-01-15T17:12:00.001+10:00

A recent report by Urbis lists South Brisbane as being "trendy" and Indooroopilly as a "prime unit location". Bowen Hills also gets a mention as an area undergoing redevelopment.
See Article

Why are Landlords Hostile to Pets?

2012-01-13T21:26:00.001+10:00

Many landlords are hostile to pets. My experience is that students are worse than pets.

"Brisbane vet Michael O'Donoghue has seen too many people have to give up, or put down, their pets because they could not find a rental property that welcomed animals.

"It's very heart-breaking, people euthanising their beloved pet because they can't find accommodation," he said."

See SMH

The Dunmore in the Valley

2012-01-13T21:21:00.001+10:00

There is a new apartment development currently being marketed in Fortitude Valley. It is called The Dunmore. Management rights have been sold to Mantra, and the property will be managed under the Peppers brand as a small hotel. For investors, the rental returns will be on a pooled basis based on lot entitlements, similar to many Mirvac properties.

According to the selling agent, The Dunmore will comprise of 78 apartments including:

- 42 One bedroom apartments, a number without car parking

- 18 One bedroom + study nook apartments

- 18 Two bedroom apartments (inc. flexibility of dual key access)

Product	Price Range
1 Bedroom	$376,000 - $462,000
1 Bedroom + study	$399,000 - $482,000
2 Bedroom	$572,000 - $632,000

Predictions for 2012

2012-01-01T01:30:00.000+10:00

I am not going to make any major predictions for the Brisbane apartment market for 2012. It is too uncertain what will happen next.

It is probably not a good time to sell. If you can hold off selling, then that is probably wise. (I guess that the market will, at worst, be flat.) However, if you may be forced into selling sometime in 2012, such as due to loss of a job, divorce, financial difficulties, or a forced move, then it is probably best to sell as soon as possible so that you are not a distressed seller.

If you are buying, there is plenty of choice. But only buy if you plan to hold for the long term. I think it is better buying an established apartment than buying off-the-plan, at least in Brisbane. (The Gold Coast is a different story.)

Rents are unlikely to fall. Body corporate levies are unlike to decrease. Who knows what interest rates will do.

I may buy in the next 6 months, but only if the price is extremely competitive or the property is extremely unique. I doubt that I will buy off-the-plan this year.

Two books to assist you:

Finding A Great Apartment to Rent in Brisbane

2011-12-28T01:00:00.000+10:00

Introduction

Finding a good apartment or home unit to rent in Brisbane is not easy, particularly in January and February when the demand for apartment rentals is high and many tenants are looking.

In the best buildings, the existing tenants do not often leave, and when they do move out, the apartment is often snapped up quickly. For the better buildings, a large percentage of the apartments are occupied by the owner, and so are not rented out. Also, onsite managers often control the rental rolls, and don't often advertise on the usual property websites (as they don't need to do so). Some have their own website. Also, onsite managers may have a relationship with executive relocation services, and the better apartments may be provided to corporate tenants. For the mid-quality buildings, many apartments are furnished and rented on a short term basis, sometimes even overnight. Thus, there may be few apartments available for rent.

At one time, a good specialist website for apartments was http://www.seqrents.com.au However, it seems that some buildings are not using this site anymore, or are not bothering to update their listing on this site. So, although useful, it is less useful.

A newer website that has a number of rental listings is CityApartmentSales, and is used by a number of the onsite managers to list apartments for rent. The largest number of listings are located on RealEstate.com.au, but a number of onsite managers do not use this website. Also, try Central Apartments for rentals in Pradella buildings.

You have to find out how each manager advertises his/her vacancy.

Generally, you want to avoid any buildings managed by Oaks, as they focus on short term hotel style rentals.

This website has a list of most city apartment buildings, with useful information and links about them. Also, try this customised search engine.

Downtown Brisbane:

If you want to live downtown, then I recommend the Admiralty Precinct. This comprises three first-tier buildings (Admiralty One, Admiralty Two and Admiralty Quays), plus River Place (good location, not as good quality) and Skyline (second tier). Recently partially opened just behind these buildings is Meriton's Soleil (budget quality).

Admiralty One is good value, and has some of the largest two bedroom apartments in Brisbane, but is a smaller building. It is direct river front - http://www.admiraltyone.com.au/

Admiralty Two also has good sized apartments, and the building has great facilities. http://www.admiraltytwo.com.au/

Admiralty Quays is newer, and has a great pool, but the apartments are smaller than the two Admiralty buildings listed above, and it is more expensive. http://www.admiraltyquays.com/

Nearby on the river in the city is River Place, that is not as good quality, but is likely to have availability as this is a large complex. Careful of Storey Bridge noise. Great views. Great pool.

Soleil has only just opened. It is currently the tallest building in Brisbane. A large building with over 400 apartments, but less than half have been sold. In late December, the Soleil website said that there were currently no apartments available for lease.
On Alice Street in the city, if you can get an apartment in Quay West, that is fantastic, as it has park and river views. About half the apartments in this building are hotel managed, so it is easy to get short term accommodation in Quay West, but difficult to find an apartment for a long term lease. All apartments are privately owned. You want to get above level 7.

For an inner city downtown building, Metro 21 is one of the better quality buildings. It has only 4 apartments per floor -- and tries to be more upmarket so is better than most buildings that aim at students -- it seems to have better availability, and some of the two bedroom apartments have three bathrooms. The baloneys are large:
http://www.realestate.com.au/realestate/agent/metro+21+brisbane/mlibri
and http://www.metro21apartments.com.au/

M on Mary has recently been taken over by new management, so it will be interesting to see what happens in this building. It was not high on my list previously, but that may change with the new management.

Parklands at Roma Street also has some good apartments.

SouthBank

I recommend Arbour on Grey at SouthBank: http://arbour.com.au/cms/welcome.html

Also, Saville (Mantra) at SouthBank is one of the nicest buildings if you get a river facing apartment. The apartments are level 8 and above. Below level 8 is a hotel. The best thing to do here is call to find out availability. Telephone 07 3305 2559

West End

There is likely to be some availability in some of the riverside West End apartments. These include Waters Edge, Flow, Koko and Left Bank.

Some of the better apartments not on the river road include SL8 and Tempo.

In my view, all of the above West End apartments are too isolated.

Apartments in Suburbs

The suburbs that I recommend, due to location, transport and large number of better quality apartments, are Toowong, St Lucia, Taringa, Indooroopilly and possibly Milton and Hamilton. I don't recommend Chermside.

In Indooroopilly, there has been very little recent construction. Two of the newer, quality buildings Riva and Ciana.

Riva has apartments with great river views. It is a quiet building, with a pool, and is close to the train station and Indooroopilly Shopping Centre. It has good onsite managers, but apartments rarely become available here.

Ciana is a larger new complex, in a central location, with many large apartments. There is a pool and gym, plus a bowls club!

The newest complex in the Toowong / Taringa area is Fresh. This complex has two pools, a gym and great gardens, and a large number of apartments are owned by super funds and thus are rentals. Try here.

Next door to Fresh is Encore, which is a relatively nice complex, with good pricing (but not as nice as Fresh, and some of the apartments are small). This complex flooded in January 2010.

St Lucia is harder to find quality -- there are few onsite managers. So you have to try local real estate agents.

If you want an apartment complex that feels more suburban, then Parklands at Sherwood is a great choice. Many apartments have park/rural views, and there is a great pool and bbq area.

Nearby is Tennyson Reach, where you can get a large new apartment on the river. This is a new complex, but (apart from river views) not a great location. It was badly flooded. You can rent a high quality apartment at a reasonable price here, if you don't mind the location.

Off-the-plan commissions

2011-12-26T07:00:00.000+10:00

I have recently come across off-the-plan developments in Brisbane where the agent is being paid a flat 7% or 8% commission. These agents are mostly selling to foreign buyers. On a $600,000 apartment, that means $48,000 goes to the agent. In other words, you are paying at least 8% too much!

Apartments in Teneriffe, Brisbane

2011-12-25T03:00:00.000+10:00

Rents and apartment prices to face some stiff competition in Teneriffe?

The sky-high rentals and apartment sale prices being charged for apartments in Teneriffe may soon face some stiff competition when the several hundred brand new apartments being built by FKP at its new Gasworks complex combined with those already for sale at Mirvac’s Waterfront complex, both at neighbouring Newstead, come on stream. There are some 600 units and apartments planned for construction in that area.

This may have been the trigger for the formation for the recently formed Teneriffe Apartment Managers Network.

A recently released brochure, Renting in Teneriffe, is available around the area and promotes sales and renting of apartments through the on-site apartment managers listed and includes 19 apartment complexes that are let by on-site managers in Teneriffe. Many of the apartments at Teneriffe are converted Woolstores while others such as Dalgety-Mercantile and Winchcombe-Carson complexes were built around 1994-96.

Perhaps the Teneriffe apartment complex managers have already concluded that they can expect some fierce competition in terms of property prices and rents towards the end of 2012 when the FKP apartments come on stream, which start at $450,000 just a hundred metres down the road from Teneriffe.

Woolworths is set to open a supermarket in the FKP complex, and boutique shops are planned along with office space and the 5 hectare Parklands area. It’s going to be interesting to see if rents and property prices hold up in Teneriffe when these complexes come on stream in late 2012 and early 2013.

Spotting a Bubble

2011-12-24T21:44:00.001+10:00

An excellent article by Bill Moss, who was very senior at Macquarie Bank, has been published recently.

"I have always believed that no one should ever invest in anything unless the fundamentals are right. If the people who pay the rent or borrow the money to purchase a property cannot afford to keep up repayments, then a property investment fails. After a global financial crisis, the concept of keeping vacant real estate as an inventory item, as the sheiks of Dubai did or as the Chinese and Russians tried to do, is doomed to end in tears."
Read the full article at Property Observer.

Soul

2011-12-23T22:10:00.000+10:00

A new Soul website, that shows actual interior photos of apartments, has been launched. It appears that less than 100 apartments have actually settled to date. A number of off-the-plan contracts have crashed. The building is being managed by Mirvac, soon to be Accor, under contract. Mirvac did not purchase the management rights.

Asian Developers

2011-12-23T01:30:00.000+10:00

"Foreign developers have grabbed a 30 per cent share of Australia's apartment market, a trend not repeated since the Japanese office and hotel development boom in the late 1980s.

Overseas investors are behind 13,000 apartments in 37 projects in Australia. Based on the average number of apartments completed in 2011, that represents a market share of as much as 32 per cent, research by the property group CBRE finds.

About 40 per cent of projects are under construction; the rest are at the planning or marketing stage."

See Fairfax

So it appears that Asian developers are building small apartments in Australia for Asia buyers that are rented to Asian students. When the tide goes out, will Australians want to buy or live in these boxes?

Not So Devine

2011-12-22T10:30:00.000+10:00

"Home developer Devine warns deteriorating property market conditions will cut its full year pre-tax profit by 31 per cent.

Market conditions had continued to deteriorate across most Australian property markets, which had delayed Devine's ability to bring new projects to the market, the company said on Wednesday."

See Business Spectator

Housing Shortfall in Queensland?

2011-12-22T03:00:00.000+10:00

"Australia's housing shortfall is expected to blow out to more than 640,000 in 20 years, prompting industry calls for tax cuts and other measures to stop prices going through the roof.

The gap between demand and supply increased by 28,200 to 186,800 housing units this year, a National Housing Supply Council (NHSC) report reveals.

The annual report on the state of supply shows NSW and Queensland had the largest shortfalls of 73,700 and 61,900, respectively."

See Business Spectator

Off-the-plan craziness at The Oracle

2011-12-21T23:09:00.001+10:00

Here is an interesting but sad story about a teacher's aid, who signed an off-the-plan contract in 2006 to purchase an apartment in The Oracle at Broadbeach for $940,000, plus stamp duty. Unsurprisingly, she was unable to settle and then unsuccessfully sued the developer (Niecon) to get out of the contract.

"She explained that she did not have the funds to settle and that the matter had cost her $7,500 in bank guarantee fees. She explained that she had a mortgage of around $100,000 on her $300,000 townhouse, was in her mid-50s and earned about $550 per week as a teacher’s aide. She asked to be let out of the contract and explained the difficulties that she had in meeting the required deposit of $94,000. She explained that she had brought up her children without maintenance from her former husband and saw the investment in The Oracle as a way of finally getting ahead by using the equity in her home as the deposit."

In early 2010, before completion of the development, she listed the property for sale at a price of $1.28 million. "This price was selected because it would enable her to cover the purchase price, stamp duty and agent’s commission. However, the price of $1.28 million was unrealistic in the light of the global financial crisis and its impact on property prices, even though Ms Ryan had the hope that such an iconic building would not be affected as other parts of the market had been."

What a crazy thing for this person to do. Why would anyone in their right mind who was earning $550 a week sign a contract to purchase a Gold Coast apartment for about a million dollars?!

See Decision, at paragraph [326] and following.

The Oracle - Developer Wins Lawsuits

2011-12-21T22:58:00.000+10:00

The developer of The Oracle at Broadbeach was sued by a number of people who purchased apartments off-the-plan and then, after the market dropped, did not want to settle. The developer won the lawsuits, and the buyers have to pay significant damages to Niecon.

Interestingly, the judge's decision (which is long and complex) discussed issues about when a residential apartment building is and can be operated as a hotel or short stay letting operation.

"The contract provided that any authorisation of a person as a letting agent would be in the terms of the Caretaking and Letting Agreement annexed to the Disclosure Statement. That agreement provided for the entity appointed by the body corporate to operate a letting business, and to use certain common property for specified purposes. The letting business was not limited to long-term tenancies. Nothing in the Caretaking and Letting Agreement provided that the letting agent could not conduct its letting business so as to attract short-term tenants and holiday-makers. The letting business involved associated services commonly rendered in connection with letting lots in similar developments and “any other lawful activity.” This authorised the provision of services to guests occupying apartments, including guests staying for a short time who might require room service, a mini-bar and other “hotel-like services”."

"The fact that [the onsite manager] provides guests with certain “hotel-style services” does not mean that the tower has ceased to be a “residential tower” in the sense earlier described. The fact that some of the occupants are there for a short term does not mean that the tower is not a residential tower. The contractual promise of a lot in a residential tower relates to a tower used for residential purposes. The relevant provision distinguished the residential component from the retail component of the development. In its contractual context, a residential tower does not mean simply a tower for owners who are residents or long-term tenants."

Risks of Buying Off the Plan

2011-12-21T20:37:00.000+10:00

Property commentator Michael Matusik published some articles recently about the risks of buying of the plan. See:
Risks 1 to 3
Follow Up Comments

For a more detailed analysis, see the recently published Kindle Book: Buying An Apartment Off The Plan in Queensland - A Guide For Successful Buying.
This book can be downloaded to a Kindle, iPhone, iPad or computer. The cost is less than $10, so good value if you are planning on spending money on an apartment in Queensland.

Cash or Property?

2011-12-21T06:00:00.000+10:00

This story has been submitted by a reader:

"Read with interest your story “Property or Shares”. I know many people who are equally dismayed at the negative return and decimation of their super fund accounts. I know some people who were intending to retire in 2012 but now say they will have to work for years, but now are soon to be made redundant. Where does a person of retirement age with a successful white collar job history get a job. Impossible they say. Meanwhile, their super funds continue to get chewed up. I feel very sorry for them. They were well off, nice, generous people, now they are bitter and angry and getting poorer and are looking at selling their house in a declining market and downsizing to a granny type flat and will have little money to live out their retirement years.

To add to your “Property or Shares” post, I’ll give you a similar actual for “Cash or Property”. I owned (no mortgage) a PPR property in a very good Brisbane West suburb bought in 2004 for $285,000 inc stamps. I sold it in Jan 2010 just at the final ring of bell of the top end of the market for $1,100,000. For certain reasons, I also paid CGT of about $60,000 out of the proceeds leaving me with $1,040,000. At the time of sale, it was impossible to get a similar house in that street under $1,000.000, though those days were quickly coming to an end as the GFC MK-1 took hold and I took the risk to unload and rent. I felt at the time those houses were way over valued. People would pay anything to live in that street. I used to attend auctions as a spectator sport in that street and watch them go mad. They’d pay anything. I told myself they were mad and decided to sell, the bell is about to ring. Not by accident, I was right.

I’ve had that cash on deposit with the banks and have been getting between 7.75% and 6.05% distributed across several online savings accounts approximately averaging in rough figures $66,000 p.a. To date, approx $120,000 in interest, compounding, with absolutely no risk, bank guaranteed, calculated daily, paid 1^st of the following month every month with cash funds available in just seconds.

Meanwhile, that house and all houses in that street have depreciated in value and are now selling for $680,000 to $775,000. Just recently, a house of almost identical age, design, appearance , condition, size and land size directly across the road from my old house sold for $750,000. I’m awfully glad I sold out. I’m now renting at an absolute riverside location, a 2brm unit for $24,000 per year. I reckon I’m $350,000 ahead in CASH than if I’d held on in the property market and still owned that property today."

Mirvac Sells Hotel Division to Accor

2011-12-20T22:27:00.000+10:00

Mirvac announced today that it is selling its hotel division to Accor. In Brisbane, Mirvac owns the management rights for Quay West in Alice Street and Sebel Suites in Charlotte Street. Mirvac also owns the management rights for Sebel Maroochydore and Sebel Noosa, Cairns Harbour Lights, the Sea Temples in Far North Queensland. Mirvac is managing the Soul complex on the Gold Coast under the Sea Temple brand.

This sale received international attention, probably because Accor is a French company.

Many investors have purchased strata titled apartments in Mirvac managed buildings. For the most part, the income is pooled, and investors receive income based on lot entitlements. It will be interesting to see if Accor will be able to manage such complex arrangements, where each hotel has, in effect, many different owners.

A message to Mirvac staff from management said the following:

"The strategic review has today culminated in the Board of Mirvac Group approving an important transaction involving the sale of Mirvac Hotels & Resorts to Accor Asia Pacific (“Accor”) and the sale of Mirvac’s 49% interest in the Mirvac Wholesale Hotel Fund (owner of six of our largest hotels) to Accor and Singapore based investor Ascendas.

This transaction is a transforming event for our company. It will create new opportunities for staff, our owners and our customers. There are also some critical elements to the transaction that I will explain below that should encourage staff to embrace the opportunity to be part of one the world’s largest hotel companies. I can imagine you have many questions and I will attempt to touch on what I think are some of the major items.

What does this mean for Mirvac Hotels associates?

Under the terms of the sale contract Accor is obliged to offer employment to all staff on their prevailing terms and conditions.

How will our business transition to Accor?

The transition of our business into Accor will be a gradual and considered process to ensure minimal disruption. This means key elements of our business such as CRS, web site, sales & marketing programs, national training, STARS Program will initially continue as per usual.

What is the timing for the completion of the transaction?

Completion is subject to a number of consents and regulatory approvals which means the sale will not be completed until the second quarter of 2012. Until completion, it will be business as usual. Post completion it is anticipated there will be interchange of staff between Accor and Mirvac Hotels & Resorts that hopefully will give everyone the opportunity to enhance their career path."

Apartment Rentals In Inner Brisbane

2011-12-20T04:30:00.000+10:00

Top 10 most expensive inner-Brisbane suburbs for unit rentals: RP Data

Chinese Buyers

2011-12-19T20:21:00.000+10:00

A website for Chinese buyers of real estate outside China is in the process of being launched. It is called Juwai. There are already a bunch of Australian listings.

"The site has more than 1 million property listings from over 80,000 agents and developers in the US, Australia, Canada, the United Kingdom and Japan. Schwartz says there a “huge need” for such a site." See Property Observer.

Property or Shares

2011-12-18T20:54:00.002+10:00

I looked at my super account with BT tonight. Invested all in Australian and international shares. Over the past 11 months, I have added $24,000 to my super account. However, despite this, the balance of my account is exactly the same as it was on 15 January 2011. The losses on my super account are way worse than any losses on my property investments.

Maybe I should have followed the investment advice of the billionaire lawyer.

Distressed Sales

2011-12-18T13:13:00.002+10:00

A recently Landmark White report states that about 31% of properties advertised for sale and coming onto the market recently are listings that are distressed sales. Many of these would be Gold Coast apartments. The report covers industrial and commercial properties as well as residential.

See full report here and this comment.

Photo above of one of the pools at The Oracle.

The Oracle Gold Coast

2011-12-13T20:02:00.000+10:00

Oracle receivers have released a special new price list for local agents for Oracle apartments in Broadbeach.

Agents report that the new prices fit squarely into the current hi-rise market values of central Broadbeach at around $4200-4900sqm.

During the past week, it is reported that 12 Oracle properties changed hands on the new prices with around another dozen or so under offer.

Photos show an Ocean view from a one bedroom apartment in The Oracle.

Update from 15 December: "During the past 24 hours, 6 out of the 59 receivers stock has sold and 18 are on hold." [I suspect that the receiver has more than 59 apartments that are unsold, so this must be a trickled release.]

Rent Money is Dead Money - part 3

2011-12-06T20:11:00.001+10:00

Another interesting comment from a reader regarding the prior post Rent Money is Dead Money:

I am a number of months into my apartment owning experience, and your colum on buy versus rent this weekend was very interesting.

It has surprised me how relatively expensive apartment living is in comparison to houses. Unencumbered by the facts, you would think that apartment living would be cheaper due to massive economies of scale:

· Two pools supported by 400 units not one pool by one house

· Four large garbage collections from four points rather than traversing a neighbourhood with 400 different pickups – council gets the benefit of this one – and nobody would use tip vouchers.

· Maintenance of larger grounds, but offset by 400 units supporting, versus grounds per house

· Economies of scale on hot water heating by using much larger units

· Economies of scale on water requirements

· Economies of scale on heating and cooling due to insulation from two sides, roof and floor not being open to environment.

Obviously the above benefits are eroded by the cost and maintenance of elevators, the onsite manager, profit margin for developer, security, etc.

For my apartment, annual fees for rates etc are not $5k per your note but $9k, comprising $6k body corporate and insurance, $2k rates, and $1k water.

The $6k for the body corporate was not particularly out of line for similar units when I was looking around.

The $2k for rates is just as a result of robbery by Brisbane City Council. My home rates are only $1.4k. Rates for my apartment should be only $1k but a 2.1 parity factor was put on by the Council when they went through that rate adjustment exercise.

Obviously at home in a house, I have no body corporate, but realistically I should consider the $45 I pay a fortnight for lawns mowed as equivalent, and I look after my own pool.

So I am paying $1.2k/yr for lawns mowed, if I got the pool looked after I am guessing that would be $40 per month or so. Say that’s $2k per year. Home insurance is probably $600 per annum, can't tell as it is bundled with contents. There are other costs with the pool, all the chemicals, the pumps/chlorinators etc and some provision for outdoor maintenace , say another $1k per year. So in fact that is $3.6k per year, maybe a bit higher than I thought it would be. And there are probably other episodic costs that I haven’t been quite fair to my unit on. I just had to spend $3k to get my home pool fence up to spec. Maybe the comparison is not as bad as I first thought. If I am honest there would be other expenses on my house that would be covered by Body Corp for equivalent unit.

But still, even with all this, it seems evident that the apartment is still more expensive than house and all those economies of scale are eroded.

Obviously the other cost savings that you really need to be taking with an apartment are as follows:

· Dropping Gym memberships and using shared facilities at the common areas.

· Dumping at least one car – that would give a pile of savings, that are only going to get higher.

I don’t see the power bill for my unit, but this is an area where I suspect apartments are losing out to houses. I've had for over a year solar hot water and solar panels for elec gen on the roof. These have paybacks of around 5 years or so based on current elec price and are only going to get shorter payback as power bills increase. How are apartments getting onto the bandwagon of sustainability. I am sure it is impossible to get a pile of owners to cough up more money to install solar hot water or solar panels.

Rent Money is Dead Money - part 2

2011-12-04T21:21:00.001+10:00

This is a note from a reader, in response to the prior Rent Money is Dead Money post.

Here’s an actual position scenario sent in by a reader in support of the report “RENT MONEY IS DEAD MONEY” that is, is it better financially to rent than own an apartment. The figures quoted here are actual, dated within the last 6 months. The apartment is a 2 bedroom in Newstead, approx 12 years old with good partial views of the river, 1 car parking, in a well managed complex.

Cost of Ownership VS Renting the same apartment. (round dollars)

Most recent sale price = $650,000 (2 years ago were selling for $725,000 to $795,000)

OWNING

Rates $2060 p/a

Water & Sewage $804 p/a

Insurance $480 (personal property) p/a

Corp Body $4169 pa

Sinking Fund ??

Extra Levy ??

Total cost of Ownership $7513 /12 months =$626.00 p/m

Loss of Interest on capital ($650,000 @ 6.11%) = $39,715 pa /12 = $3,309 p/m

Total cost to buy outright for cash = ($3,309 + $626) = $3925 p/m

COST PER YEAR TO OWN = $47,100

Other: At present, is a depreciating asset while ownership costs continue to rise.

RENTING

Rent paid = $2100 p/m = $25,200 p/a

BUT

Still have $650,000 in bank earning $39,715 pa (Bankwest, citbank, ING, ANZ (6%) et al online saver accounts, immediate access to funds)

Other: Property prices continue to fall, and may fall further in 2012 = no depreciating asset to carry.

Flexibility to buy if/when prices fall further.

No responsibility other than taking good care of the property and paying rent on time.

COST TO RENT = $25,200

SUMMARY

To own = loss of $1825 p/m x 12 = $21,900 p/a worse off owning a depreciating asset, just to say you own it. ($47,100 -$25,200 (rent) = $21,900). Who would want to own one with a loss like that!

I’m better off renting than buying AND still have liquid cash in bank. Therefore, with my money in the bank, I’m $21,900 a year better off renting.

THERFORE

To equal the return I get from the bank for the same money it would cost me to buy into these units, the unit would need to be priced at $427,000. Therefore, the real price of these units is $427,000. At $650,000, they are grossly overpriced, as we all know. $427,000 is the real value of these units.

And to the critics, don’t mention inflation - I don’t believe in it over a short term 2-4 years. If you insist upon mentioning inflation, I’ll raise you a clear hand with “depreciating property prices”, 10 times the loss of inflation in just 18 months or “CGT” later or Negative Gearing (surely you’ve lost enough already without NG!).

Apartment values outperform houses in Brisbane

2011-12-04T12:20:00.001+10:00

Headline in today's paper:

UNITS continue to outperform houses in Brisbane, according to the latest market research from property analysts RP Data.

Extract from story:

"And, from an investment perspective, they offer superior rental returns. The gross rental yield for a Brisbane house is currently recorded at 4.7 per cent compared to 5.3 per cent for Brisbane units." [Note: this does not take into account higher costs for apartments, namely body corporate fees. It may be the case that net yields are similar for apartments and houses.]

The level of vendor discounting for houses is also greater - 8.3 per cent compared with 6.8 per cent for units.

"Discounting levels for houses are higher than at the same time last year, however unit discounting is slightly improved from the 7 per cent 12 months ago," Mr Kusher said.

"Despite the inflated discount levels, both measures are below their recent peaks of 8.7 per cent and 7.8 per cent respectively."

The average time it takes to sell a Brisbane property is also at relatively high levels.

Of those properties that sold in October, houses had been on the market for an average of 61 days and units 60 days. Both measures were higher than they were 12 months ago, but both had improved from their respective recent peaks of 66 days for houses and 61 days for units.

Mr Kusher said the data was for October and therefore did not take into account the Reserve Bank cut in interest rates by 25 basis points on Melbourne Cup day."

Full story here.

Short Term Only

2011-12-04T12:15:00.001+10:00

Some apartment buildings are built for residents, but are used for short term stays (hotel style accommodation) that causes problems for residents. Some apartment buildings are only built for short term stays, and are trying to keep out long term tenants and owner occupiers.

"Quest on Story resident Cameron Green said that unless he and the owners of another eight apartments in the inner-city Kangaroo Point building could find the money to fight a legal battle, they would be out on the streets.

The residents bought their homes unaware that under the town plan they could only be used for short-term stays.

In many cases the apartments were advertised as suitable for first home buyers, the new owners received first home buyer's grants and in all cases solicitors carried out all the relevant searches."

Full story here.

Rent Money is Dead Money

2011-12-03T15:37:00.001+10:00

I often hear young people say that rent money is dead money. However, in many instances, it is better to rent than to buy. This is particularly the case if you only want to live in the property for up to three years. The transaction costs kill any possible benefits of buying.

Consider the purchase of an apartment for $450,000 in Brisbane. The stamp duty (unless it is a first home) is just over $14,000. The real estate agents' commission on resale (when you come to sell) is about $12,000, plus advertising costs. This totals $26,000, or $500 a week if you own for a year, or $166 a week if you own for three years.

Plus you have to pay rates, body corporate, water and insurance, which for most apartments in Brisbane will be more than $5,000 a year (or about $100 a week).

So if you own for three years, you will be paying about $266 a week for stuff that the landlord would normally pay.

This does not take into account interest payments. Interest is likely to be more than $24,000 a year (assuming no payment of principal), or $461 a week.

So to own the $450,000 apartment for 3 years will cost the equivalent of at least $727 a week in rent. Of course, you can rent such an apartment for much less than this. So if you have a $90,000 deposit, put it in the bank and receive $100 a week in interest, and rent for $500 a week, and you will be at least $327 a week better off renting than buying!

Gold Coast Apartments

2011-12-03T14:28:00.001+10:00

"The supply of land, units and housing, as predicted was aproblem in 2011. This was particularly evident in the unitsector. In spite of no new major projects commencingthere is still an oversupply of new and near new unitstock washing around in the market. Unit values havecontinued to slide over the course of 2011 driven downby a combination of liquidators/receivers holding toomuch stock, a lack of confidence amongst buyers and asteady supply of mortgagee sales."

HTW Month in Review

By the way, The Oracle has a new fancy website.

RP Data October 2011 Index

2011-12-03T14:18:00.001+10:00

Based on around 285,000 sales over the first 10months of 2011, the RP Data-Rismark Home Value Index recorded a decline in themonth of October prior to the decision to cutinterest rates in November. In raw and seasonally-adjusted terms, capital cityhome values slid 0.2 per cent and 0.5 per cent,respectively over the month of October. Over the 10 months to end October 2011, Australiancapital city dwelling values have declined by 2.8 percent on a raw basis and by 4.0 per cent seasonally-adjusted. RP Data's Tim Lawless noted that premium housing markets are continuing to record the largest falls invalue.

Brisbane Apartments (raw, not seasonably adjusted):

Median sales price for quarter = $360,000
Monthly increase in sales price = 1.8%
Quarterly increase in sales price = 1.1%
But year on year is down 1.4%; year to date down 1.6%

Seasonably adjusted, year to date down 2.4%

See Full Release from RP Data

Hotels in Apartment Buildings

2011-12-03T14:10:00.001+10:00

Many of the apartment buildings in Brisbane are "class 2" buildings -- which means they are for residential use. To operate a hotel, the building must be a class 3 building.

A number of onsite managers operate hotels from class 2 buildings. An example is Oaks. Many owners are not happy with this situation. See prior posts for example.

At M on Mary, an owner tried to stop the onsite manager operating a short term rental operation from the building, on the basis that the building was only a class 2 building. A decision of the Tribunal said that it did not have the power to deal with this issue. See decision.

Pets in Apartments

2011-12-03T13:57:00.001+10:00

Another decision concerning the keeping of a small dog in an apartment -- Arbour on Grey. Here, the dog owner was unsuccessful. But the decision confirms that it is not appropriate to have a "dog free" building.

If conditions are imposed, they must be reasonable. See the recent 212 Margaret decision. The following conditions in the bylaws were struck down as unreasonable:

the pet does not weight (sic) more than ten (10) kilograms.
only one animal is to be kept within the lot.
the body corporate shall be entitled to withdraw its consent and require removal of the pet upon receiving two (2) substantiated complaints regarding the pet or the owner breaches any of the conditions of the approval.

I am always amazed that some body corporates want to ban pets. It just deceases the pool of possible buyers, and thus deceases the value of their apartments.

Oversupply of 1 Bedroom Apartments in Brisbane?

2011-12-03T13:51:00.001+10:00

A number of real estate agents have told me that there is an oversupply of 1 bedroom apartments without car parking in Brisbane. That oversupply is likely to get worse as there are many new 1 bedroom apartments about to settle in off-the-plan buildings nearing completion.

Suncorp Selects Southpoint as New HQ?

2011-11-28T21:03:00.001+10:00

There are rumours going around that Suncorp has select Southpoint at South Bank as its new headquarters. Construction has not even started, so it will be a long way off. (The other option Suncorp was looking at was 480 Queen St, the site of the proposed but abandoned Trilogy Tower.) I suspect that this will add to the value of apartments in South Bank and some in South Brisbane.

Update: Tuesday 29 November: Rumour confirmed as correct.

Chinese Retreat

2011-11-27T20:09:00.001+10:00

"Australia’s largest apartment developer, Harry Triguboff, has confirmed that Chinese buying of inner-Sydney apartments has halved in the last month. The China squeeze on its property market and fears about the level of our dollar are now having a direct effect on the Australian dwelling market.

Triguboff believes that the sharp cutback in Chinese apartment demand will probably reduce apartment prices in Sydney by about 10%, but the prices will not collapse. He believes that a fall in apartment prices will flow on to the whole dwelling market in Sydney."
Full story here.
Harry Triguboff is the owner of Meriton, that is developing two massive apartment towers in Brisbane, Soleil and Infinity, where most of the buyers are reported to be Chinese. It is uncertain what impact China will have on the Brisbane apartment market.

View Tax

2011-11-27T20:02:00.001+10:00

Apartment owners in Queensland are often taxed by local councils at higher rates than those of land owners or house owners. People are starting to get upset by this. In many cases the councils don't care, because the apartment owners don't live in the area and therefore can't vote. See Sunday Mail story.

"Auctions A Bad Way to Sell"

2011-11-27T19:56:00.001+10:00

Interesting report on Sunrise, that touches on real estate agents not reporting bad auction results. See here. Also discusses current uncertainty in property market.

Decreasing Market

2011-11-25T05:30:00.000+10:00

According to Residex, the median sales price of Brisbane apartments dropped 3.48% in the year ending October 2011 and dropped 1.74% in the last quarter.

See Residex blog.

Foreclose and Bulldoze

2011-11-24T15:00:00.000+10:00

See: The New Way To Foreclose

Hamilton One (also called Harbour One)

2011-11-23T22:13:00.001+10:00

Here is a comment sent to me by a reader:

Recently, I arranged an inspection of apartments for sale in Hamilton One. I am in the market so the request for an inspection was 100% genuine.
The complex was only just finished. The thing that turned me straight off permanently in my particular situation, was that all the one bedroom apts do not have an oven to cook with and there is no provision for one, just a two-burner gas top. They have put in a movable bench-top convection microwave. It would be impossible to put a small gas BBQ on the balcony because the balcony’s are essentially closed in albeit for the concertina sliding windows which are up at about eye level upwards so the gas BBQ would essentially be inside, a VERY BIG no-no. Of course, horses for courses and some people don’t cook, (I suppose??) so they may see that as a plus. Micro-waved and wok-cooked food does not appeal to me personally.
While prices are advertised at $300,000 for one bedroom, that’s with a view of other high rise buildings, and no car park. I guess if you don’t have a car that’s fine, why pay for one if you don’t need or want it? I personally could not do without one. Therefore for me with a car, I think from memory (check for yourself) that one needed about a $415,000 start to have a car park however, that did include a reasonable view (in my opinion) since the one brm apts with car parks are on higher floors than those one brm apts without a car park.
The concertina windows when open did seem to provide good ventilation and individually controlled ducted air con is throughout. The apt’s did have plenty of natural light which I thought was good, though another seven story complex is now under construction on the Nth side so that may impact on light, maybe not.
Comms are Optus only. I personally did not like that “no-choice” option. According to the agent, hot water is individually metered from a central (gas??) boiler that distributes hot water around the complex and water is individually metered. I’m not sure how one went about getting electricity. I wonder what the unit rate for those utilities is? Foxtel is wired in, buy it yourself if you want it.
The sales agent while quite pleasant seemed otherwise busy so other than a couple of apartment configurations, I was not shown around the complex to see the pool and any other facilities that may be there. I saw one pool though I think there may be two???

RP Data's Summary

2011-11-19T20:00:00.001+10:00

Here are some interesting slides from an RP Data presentation. Double click in the slides to make them larger.

Brisbane at the bottom? Value Growth Starts to Improve on an Annual Basis

Brisbane transaction volumes have once again weakened:

Rental Rise in Brisbane

Number of properties advertised for sale has increased to record levels

Buying Off The Plan from Juniper

2011-11-19T18:47:00.001+10:00

A number of people have asked me whether now is a good time to buy an apartment on the Gold Coast, particularly at Juniper's Soul building that is almost complete.

According to a number of property experts, the Gold Coast property market is still in decline, and further price falls are expected.

Let's look at Juniper's immediate prior luxury development, which is Oceans Mooloolaba. Did buyers from Juniper do well or not? It is sometimes hard to tell looking a public data, because Juniper gives under the table rebates to purchasers, so the exact initial purchase price from Juniper is not necessarily what is reported to the government.

Here is the evidence:

Apt 704, sold by Juniper for $2,500,000 in 2005; resold in 2011 for $1,805,000.
Apt 606, sold by Juniper for $1,580,000 in 2007; resold in 2011 for $1,650,000.
Apt 503, sold by Juniper for $1,300,000 in 2007; resold in 2009 for $1,070,000.
Apt 404, sold by Juniper for $1,380,000 in 2005; resold in 2007 for $1,200,000.
Apt 404, sold by Juniper for $1,370,000 in 2003; resold in 2006 for $1,150,000; resold in 2010 for $1,115,000.
Apt 401, sold by Juniper for $1,670,000 in 2003; resold in 2009 for $1,500,000.
Apt 303, sold by Juniper for $1,320,000 in 2006; resold in 2007 for $1,025,000.
Apt 301 sold by Juniper for $1,600,000 in 2003; resold in 2009 for $1,445,000.
Apt 203, sold by Juniper for $1,750,000 in 2004; resold in 2010 for $1,800,000.

Taking into account stamp duty, everyone who has purchased from Juniper and then resold has lost money. Some of the resales were before the market collapsed in 2008. One suspects that it would be best to wait before buying in Soul or anywhere on the Gold Coast for that matter.

Northshore Hamilton

2011-11-19T09:42:00.001+10:00

The $5 billion Northshore Hamilton urban redevelopment is underway, with thousands of apartments expected to be built in the next 10 years. About 15,000 new residents are expected to move into this area, which is an old port and industrial precinct 6 km down river from Brisbane City.

Two Devine apartment buildings are almost complete, with a third on the way.
Brookfield Multiplex is building another Portside apartment building, Promenade (172 apartment), with two more planned.
Citimark has development approval for Rivana, 15 levels with 208 apartments.
Mirvac has a three building apartment complex planned, with a sales display office constructed onsite.
Australand has launched 78 apartments as part of its $400 million project, Hamilton Reach.

Will there be an oversupply of small, non-riverfront apartments in this part of Hamilton, where there are few facilities and not much within walking distance?

Apartment Fire

2011-11-19T09:40:00.001+10:00

Sad news. There was a fatal fire in an apartment at Inn on the Park at Toowong this week. A lady died in her apartment. Story and photos here.

Soleil's Pricing Not Holding Up?

2011-11-18T21:12:00.001+10:00

Meriton's Soleil is partly completed, with settlements reportedly having occurred on the lower floors. The top part of the building is still under construction.

Another blog reports that Meriton's list prices for Soleil are decreasing (I have not verified these numbers):

"1 July
Studio $350,000
1 Bedroom $380,000

25 July
Studio $340,000
1 Bedroom $375,000

11 August
Studio $330,000
1 Bedroom $365,000

1 November
STUDIO $306,000 - $325,000
1 BEDROOM $325,000 - $445,000
2 BEDROOM + CAR SPACE $565,000 - $818,000
2 BED + STUDY + CAR SPACE $653,000 - $689,000
3 BEDROOM + 2 CAR SPACES $750,000 - $877,000

4.5% Vendor Finance
$10,000 QLD Building Boost
$17,000 First Home Owner Bonus"

Listed on Domain today:

1 bed, no carpark - $403,000
2 bed, 2 bath, 1 carpark - $569,000 to $818,000
resale by overseas buyer: Apt 5204, 2 bed, 2 bath, 1 car: $590,000 negotiable
resale by overseas buyer: Apt 4803, 2 bed, 2 bath, 1 car: $630,000

As stated in a prior blog post, most buyers appear to be offshore buyers from China, and at the current sales rate, it will take 2 to 3 years for Meriton to sell all its stock in this building.

Two Queensland Buildings

2011-11-18T21:02:00.001+10:00

From a recent article by Matusik: A Tale of Two Queensland Buildings

"Firstly, an investment dwelling’s worth should be determined by income – that means rent – just like it does for offices, shops and factories. It shouldn’t be determined by a “comparable” resale.

Secondly, how and where the developer spends his or her money on a project shouldn’t affect the market’s (nor valuers’) perception of value.

An investment’s value shouldn’t be determined by what a buyer once paid but by its income.
The distribution of costs has no bearing on the end value of a product."

Full article here.

Rivé Apartments

2011-11-17T20:59:00.001+10:00

Rivé Apartments near the Breakfast Creek Hotel are nearing completion.

One bedroom (77 sqm total) from $409,000. Two bedrooms (106 sqm and larger) from $545,000. See post below regarding Vecchio's prior development.

Improving Market?

2011-11-12T22:16:00.001+10:00

It is useful to look at recent sales of apartments, and compare the price at which the apartment sold with the price that the vendor originally paid for the apartment. In find this is more useful than looking at medium or average prices. For example, if a building has a mix of 1 and 2 bedroom apartments, and for the last six months, only 1 bedroom apartments are sold, then the medium price will decrease. This does not tell us whether the 1 bedroom apartments went up or down in value.

I recently had a look at sales in the Fresh Apartment building on boundary where Taringa mets Toowong, at 20 Campbell Street. This building had its carpark flooded in the 2011 floods, but no apartments had water in. The two magnificent pools were not flooded either. It was developed by Vecchio, who is currently developing Rive Apartments (see post above.)

Apt 20:. This apartment is 2 bedrooms, 2 bathrooms, 120 sqm (85 internal, 35 balcony). In March 2007, it was advertised off-the-plan for $459,000. The next year, it was still for sale off-the-plan for $504,000. It was sold by the developer in May 2008 for $566,000 (probably this was above market price). The first owner then resold it in November 2009 for $537,000.

Apt 23: This is a 3 bedroom, 2 bathroom apartment, with a North East Aspect over the pool. It is 148 sqm in total. It was sold off-the-plan for $669,000 in July 2007. It resold in September 2011 for $569,000.

Apt 54: This is a 3 bedroom, 2 bathroom penthouse apartment. It is 117 sqm internal plus a large 84 sqm balcony.. It sold off-the-plan in April 2007 for $807,000. It resold in August 2011 for $600,000.

So take care when buying off the plan or from a developer.

Devine's Hamilton Harbour

2011-11-12T17:25:00.001+10:00

Hamilton Harbour is a three building apartment complex (plus one additional building of commercial space) currently being developed by Devine. Two of the three buildings are almost complete.

According to Place Real Estate Agents, across the three buildings there are 658 apartments. There are 125 apartments remaining for sale (mostly in the third building). In the September 2011 quarter, 14 apartments sold (about one a week). At this rate, it will take 26 months to sell the remaining apartments.

One beds are listed for rent from $300 a week, two beds from $510 a week, and three beds from $850 a week.

Here are some recent photographs, taken from the Portside area, of the two finished buildings.

Two Books

2011-11-12T11:21:00.001+10:00

Before buying or investing in an apartment in Queensland, you should consider these books:

I see that BigW is now selling Kindle Book Readers.

111-222 Billbergia Apartment Tower Approved

2011-11-12T10:19:00.001+10:00

The Brisbane City Council has approved the massive 111-222 apartment and hotel tower for Brisbane. (See prior post here.)

There will be two towers as part of this development. The large tower will be 90 storeys, located at 222 Margaret Street. It will be a hotel from level 5 to level 21, and apartments from level 24 to level 88. This building, if constructed, will be the tallest in Brisbane according to Brisbane Times. If you want to buy an apartment, you can register on this website: www.111plus222.com

The second smaller tower will be commercial office space, located at 111 Mary Street.

These two towers will have a major impact on the apartment building located at 212 Margaret St next door, and will also impact some views from Charlotte Towers.

New William Street Building

2011-11-12T10:02:00.001+10:00

Echo Entertainment, who operate the Treasury Casino and nearby Treasury Hotel, are planning a new 5 star hotel at 159 William Street. The published renders show Casino Towers in the background. It appears that Oaks Casino Towers will have some of its river views blocked by this 400 room hotel.

Buyer Confidence Improves

2011-11-12T09:39:00.001+10:00

The AFR had a story on Thursday about Brisbane apartments, "Buyer Confidence Improves" (p. 55). Highlights from the article (copy available here):

Thousands of new apartments in Brisbane's inner city have helped boost sales volumes 30% in September quarter compared with the June quarter, but the number sold is still substantially lower than the same period in 2010.
312 new apartments sold in September quarter, according to Place Advisory research report
Influx of new projects scheduled for next year - 1000 new apartments are expected to come onto the market in the first half of 2012.
2059 new apartments currently for sale in Brisbane
Average sales price was $580,529.
"The Brisbane market is at the bottom of its cycle and we are now starting to see an increase in inquiry and sales activity" according to Mr Walker from Place.
Most of the sales appear to be to overseas and interstate buyers.
"The biggest positive is the local buyers are yet to enter the market. ... As consumer sentiment improves, they will start buying again."
The influx of new units, particularly in urban renewal precincts such as Hamilton riverfront, Newstead River Park, and Show Ground Hill, could limit the market's recovery.
Agents said too much choice and concerns about whether the market has hit bottom could constrain buyers.
Urbis property economics consultants said Brisbane has a long-term undersupply problem.

Luxury Apartment?

2011-11-12T09:20:00.001+10:00

Old time property developers, David Devine and Ken Woodley, now of Metro Property Developments, specialised in low end high rise apartments. They are advertising one of their many new developments, Brooklyn on Brookes, as "Luxury Valley Apartments from $305,000".

I wonder what makes these apartments "luxury"? Sure, they will be new, but a new apartment does not mean it is luxurious. Let's look at the facts:

built on a main road, Ann Street
no city or river views from most levels
191 apartments, most with only one bathroom
small apartments
no separate kitchen
bathrooms do not have separate bath and shower
little cupboard and storage space in apartment
no balcony

In my view, calling these "luxury apartments" is seriously misleading. Buyers beware!

River Place Auction Sale

2011-11-11T20:24:00.001+10:00

From a Ray White email:

"Brisbane's CBD Prestige Market Is Running Hot!!

This morning over 100 people attended the auction for 326/82 Boundary Street, a River-front penthouse in River Place.

With 18 registered bidders there could only be one outcome, a successful sale reaching $1.497M!

This proves there are buyers out there wishing to secure quality propertieswithin the Brisbane CBD."

Brisbane Rental Vacancy Rate Tightens

2011-11-11T20:06:00.001+10:00

Rental vacancy rates across many areas of Queensland have tightened over recent months, according tothe latest Real Estate Institute of Queensland (REIQ) data.

The REIQ’s September residential rental survey found the low number of investors in the property marketcontributed to the tightening of vacancy rates between June and September this year.

“The number of investors in Queensland continues to be below historical averages. What this means isthat there is not the usual number of investment properties being added to the overall rental pool, whichis putting a strain on supply,” REIQ managing director Dan Molloy said.

“The recent interest rate cut, as well as soft property prices, are likely to make investment property amore attractive proposition for investors so we will hopefully see more activity from this type of buyer incoming months. Many renters are also opting to stay put, perhaps due to the ongoing economicuncertainty, which is also have an impact on supply.”

The vacancy rate in Brisbane is 2.3 per cent.Brisbane City’s vacancy rate eased slightly, largely due to easing conditions in the 5km-plus zone, despiteInner Brisbane experiencing tighter vacancy rates since the end of June.

In terms of median rents fromthe Residential Tenancies Authority, these tighter conditions have only been reflected in weekly rents inthe south-west and north-western suburbs, both up $20 and $25 over the September quarter for three bedroom houses. For the outer suburbs, new developments coupled with the return of renovated flood-affected properties coming back into the rental pool have contributed to the increase of supply.

Good or Bad Times?

2011-11-08T04:00:00.000+10:00

Here are two conflicting articles, published on the same day in Property Observer.

1. Next year could be the best year in a decade to buy property.

2. Australia's housing bubble will eventual burst.

Who should you believe? Who knows?

My view is that, at least for Brisbane, now is a good time to buy established, well located residential apartments, if you plan to buy and hold for the long term. In my view, not a good time to buy off the plan, but some off the plan developments seem to be doing well. For example, it is reported that in the first stage of the first building in the Showground Hill development, namely The Green, all the available apartments sold out in about 3 hours. Not sure how many apartments were actually available -- they may have actually only sold ten apartments! In any event, there must be some buyers signing contracts.

Disclosure of proposed or planned works

2011-11-07T20:25:00.002+10:00

Here is a note from a reader, and it is a good reminder to do as many searches as possible and ask questions of as many people as possible before signing a contract for an apartment.

"Here is Winchcombe Place Apartments at 15 Vernon Terrace in Teneriffe (a.k.a. Newstead). Underpinning of the building is taking place. The front stairwells that exit to the street were recently underpinned as they had “parted” from the main building with cracks about 40mm in width appearing between the two.

These photos show the huge cracks at the rear of the building which is currently being underpinned. Several units in this complex were on the market prior to the work commencing. I looked at one at an “open” a few months prior to the work commencing and was unaware this work was to occur. Glad I didn’t buy one and then find this out.

The agent didn’t tell me anything about it when I inspected the apartment in March 2011. I’ve since learned a levy had been struck to pay for the underpinning. I’m not saying the agent was dishonest, perhaps he did not know, only that I was not told. Perhaps I should have asked about proposed or planned works. Had I made a successful offer, I would not have been very happy to discover this and the extra levy that records show had already been struck at the time of inspection in March. Buyer beware!"

Gold Coast and Soul

2011-11-02T20:51:00.000+10:00

Herron Todd White says that the Gold Coast apartment market is still in decline.

It will be interesting to see how many of the Soul apartments actual settle. Some photos of Jupiter's Soul -- the place looks bare and barren.

Luxury Brisbane Units

2011-11-02T20:43:00.000+10:00

"As units go, there are a few very nice projects mostlyon the river, with views and close to the city that haveexperienced good money, but sales have been rare. ScottStreet, Kangaroo Point as well as the Tom Dooley projectsare the places to find serious unit money but even thesehave seen a slower sale pace. The problem is that manybuyers are empty nesters looking to purchase subject tothe sale of their own riverfront homes which, of course,creates problems."

See HTW Report

No Views at Bella Vue - Contract Terminated

2011-11-02T20:37:00.000+10:00

A recent Queensland Supreme Court decision worth noting: Nifsan Developments v. Buskey. Mr Buskey purchased a penthouse apartment off-the-plan from Nifsan in the Bella Vue complex at Emerald Lakes. The contract price was over $1.5M. Before signing the contract, the sales agent told them about the uninterrupted views that the apartment would have. However, the developer was planning a building in front of the apartment that would block the views. The court rescinded the contract, and Mr Buskey got his deposit back.

Interestingly, the developer had a policy of not telling its sales agents about relevant information. The sales agent may be honest, but being kept in the dark by the developer.

Also, the evidence before the court was that the apartment was not worth $1.5M when the contract was signed, and was now worth about $800,000.

Extreme care must be taken when buying off the plan. You may be paying way too much. What the sales agents tell you may not be true.

See full text of decision.

Price Guestimates

2011-10-31T19:04:00.004+10:00

OnTheHouse is launching a "Guesstimates" service, to provide an educated guess of property values. See OnTheHouse. It will be interesting to see how accurate this service will be for Brisbane apartments.

RP Data - market correction slows in September 2011

2011-10-31T18:52:00.002+10:00

Consistent with RP Data and Rismark's forecasts, Australia's housing correction appears to be slowing. In September, capital city home values had their best result in 7 months (down just -0.2 per cent seasonally-adjusted and raw) while regional house values rose +0.1 per cent (s.a.).

Including rents, total returns are +0.7 per cent over the first nine months of 2011 and +0.9 per cent over the 12 months to end September.

According to the market-leading RP Data-Rismark Home Value Index, which captured nearly 251,000 sales in the first nine months of 2011 alone, Australia's soft housing market may be starting to turn the corner. The RBA's decision tomorrow will determine whether the commencement of any recovery occurs quickly, or is more elongated into 2012. Since 90 per cent of all home loans are variable rate, housing is one of the most interest rate sensitive sectors of the economy.

In the month of September, capital city dwelling values declined by just -0.2 per cent (both seasonally-adjusted and in actual raw terms). This was the smallest decline since February 2011 and was crucial in reversing a trend of accelerating capital losses since end March 2011.

Over the first 9 months of 2011, capital city home values have now declined by -3.6 per cent. In the 12 months to 30 September, capital city home values were off by -3.4 per cent.

RP Data's research director, Tim Lawless, said, "In the month of September there were wide divergences in the performance of the individual cities. In contrast to recent index results, seasonally-adjusted dwelling values actually rose in Brisbane (+0.4 per cent) and Adelaide (+0.5 per cent). They were flat in Darwin (0.0 per cent) and down just slightly in Perth (-0.1 per cent)."

Rismark executive director, Christopher Joye, added, "With home buyers budgeting on 2-3 rate hikes in 2011 that never eventuated, the housing market has been weighed down by concerns about families' future finances. The RBA's apparent switch to an "easing bias" has taken hikes off the table with the financial markets pricing a high probability of a rate cut on Tuesday.

Rismark forecasts imply that a reduction in interest rates on Tuesday, which could see discounted variable home loan rates fall to as low as 6.6%, would kick-off a recovery in housing activity. Based on our assumption that there were more hikes to come in this cycle, we had been projecting the recovery would commence in around mid 2012. This timing would be brought forward a quarter or two by any decision by the RBA to normalise its cash rate tomorrow."

Rismark's Christopher Joye commented, "Notwithstanding the extraordinary hysteria whipped about house price bubbles and so forth, the fact is that the gross total return of 0.7 per cent generated by Australian housing in 2011 is very reasonable in the scheme of things. Indeed, it looks positively attractive compared to the extreme volatility, and stunning losses, sharemarket investors have had to endure."

The number of homes advertised for sale remains high, which RP Data's Tim Lawless suggests is one of the key explanations for the secular softness."We are counting almost 300,000 homes advertised for sale across Australia, which is more than 30 per cent higher than the same time last year. Melbourne supply is especially plentiful, with listing volumes more than 60 per cent higher than a year ago. The large number of properties available for sale implies buyers will continue to hold the balance-of-power at the negotiation table," he said.

Source: RP Data Press Release

Brisbane Apartments (for period ending September 2011) - Capital Growth:

Month = 3.2%
Quarter = 3.2%
Year to date = negative 0.8%
Year on year = negative 0.9%
Median Price for settled sales of apartments in Brisbane over quarter = $365,000

Brisbane Sales Volumes

2011-10-30T18:11:00.000+10:00

Here are the number of properties sold in the 4000 post code area each year. This volume includes apartments and houses in the downtown Brisbane area and Spring Hill. Mostly, it will be apartments.

2007 - 1,342 properties sold
2008 - 729 properties
2009 - 825 properties
2010 - 525 properties
2011 - year to date reported sales - 254

Charlotte Towers - Recent Sales Results

2011-10-30T17:58:00.000+10:00

There have been 5 reported sales of apartments in Charlotte Towers in the July 2011 to October 2011 period. Charlotte Towers was developed by Devine, is managed by Oaks, and is located at 128 Charlotte Street, Brisbane.

All sales have been one bedroom, one bathroom apartments, without a car space for parking.

Apt 3101 - sold for $313,000
Apt 2605 - sold for $325,000 (purchased off the plan for $326,000; listed for sale at $349,000)
Apt 1406 - sold for $306,000 (purchased off the plan for $291,000)
Apt 609 - sold for $302,000 (purchased off the plan for $295,000)
Apt 3309 - sold for $302,000 (purchased off the plan for $347,000)

Taking into account stamp duty, legal costs, and real estate agent fees, all five of these original owners sold at a loss, and is some cases, for a loss greater than 10% (not taking into account inflation, interest costs and any furniture packages that may be been purchased -- so the overall loss will be somewhat more substantial.) There are big risks in purchasing off the plan from the developer, and buying an apartment in Brisbane as an investment is not so easy.

Also, note that the highest reported sale for the whole building, for a four month period was $325,000.

With a tower being built across the road, values are unlikely to increase for some time.

Ray White Auction

2011-10-28T23:27:00.001+10:00

From Ray White: "The Urban Living Group auctions were held last Saturday at The Emporium Hotel where 52 properties went up for sale under the hammer. A great day was had with a crowd of over 200 people attending the event and 79 registered bidders on the day. The auctions kicked off with a bang selling 7 out of the first 8 properties, with 13 out of the 26 in the first section selling at a 50% success rate. The second section of the day was far tougher with 7 out of the 26 properties selling under the hammer, but with negotiations on multiple properties we believe we will have over 80% sold by the end of next week."

Charlotte Towers

Apt 3101 sold for $313,000 (1 bed, no car)

Aurora

Apt 236 passed in at $490,000, now listed for sale at $525,000 (2 bed, 2 bath, 1 car)

Apt 458 passed in at $450,000, now listed for sale at $480,000 (2 bed, 1 bath, 1 car)

Apt 534 passed in at $925,000

212 Margaret

Apt 2103 passed in at $340,000, now listed at $375,000 (1 bed, 1 bath, 1 car)

Admiralty Quays

Apt 67 at 32 Macrossan St did not sell at $560,000 (1 bed, 1 bath), but now listed as sold.

New Pradella Development in South Brisbane

2011-10-24T20:19:00.000+10:00

Pradella is planning a new off the plan apartment building in South Brisbane. It is somewhat near the Art Gallery, and according to Pradella, will have "spectacular views at a very attractive price point". The website does not give much detail. Completion is forecast for 2014.

Property Bubble in Australia is a Myth?

2011-10-23T20:47:00.000+10:00

"It is true that real estate agents have a vested interest in not wanting to see the market portrayed as total doom and gloom. Such predictions can really be a dampener if you are trying to sell your home.

But are we really about to suffer massive house deflation?It is very unlikely. And it's unlikely because in many places deflation has already occurred and values have steadied. And while it is true that the markets that are rising are few and far between, which suburbs are these big reductions being calculated with? Which houses?

Places like south-east Queensland have certainly been hit hard and not seen increases for years. In prime inner city suburbs in Melbourne and Sydney, to claim that prices will plummet is nonsense - demand is so still so high, that its just not conducive behaviour for a price plunge."

Full story here.

Bidding at Auction Via Skype

2011-10-23T09:20:00.000+10:00

"In early October, a potential bidder for a two-bedroom unit at Cathedral Place in Brisbane's Fortitude Valley requested to use Skype from Sydney to see the auction room and observe the atmosphere. The bidder, who had previously inspected the property, ended up buying the apartment under the hammer for $437,000.

While it was a first for Ray White's New Farm office, other agents have been using the web-based PTY Property, which provides an online bidding service that has also racked up recent sales including one of more than $3 million."

See: The Australian

I guess this is better than phone bidding -- at least you can try to see if there are any dummy bids and see how many people are actually at the auction.

Call to build "pure hotels"

2011-10-21T22:02:00.001+10:00

The AFR on Wednesday had a story quoting Simon Cooper from Marriott Hotels, saying that the Gold Coast needed more pure hotels and less strata titled apartment or condo style serviced apartment buildings.

"Building a condo is all about a high ratio of units to small public space and without that space you don't get the big groups of tourists. ... they don't provide the benefits brought by the meetings and convention marketing, including the food and beverage offerings."

Take note of this warning if you intend to buy, rent, live or stay in an Oaks building in Brisbane. It is not a hotel -- it is just a cheaply built apartment complex without hotel facilities, but being misleadingly marketed and sold as a hotel. Not good for residents. Not good for people thinking that they are booking a hotel.

Lend Lease Puts On Its Big Show

2011-10-21T21:50:00.002+10:00

The headline of a story in the AFR on Thursday: "Lend Lease Puts On Its Big Show", a story about the Brisbane RNA Showgrounds development, Show Ground Hill. The first 43 apartments (The Green) will go on sale soon according to the AFR, with the developer using a $2 million sales suite and marketing shows in Sydney, Singapore, HK and KL to drive sales. It is said to be a 15 year project, with 2000 dwellings, so I guess if you miss out on the first release, you will still have a chance to buy later on.

Prices for the first stage are reported to be $345,000 for a one bedroom apartment without parking to $665,000 for a two bedroom apartment. This is a higher price than what you can buy today for a three to five year old apartment in a more central location.

CBRE says that "there was little demand for three-bedroom units in the market following a glut of high-end owner-occupier stock was built in the mid 2000s."

Off the plan sales data shows average price points have fallen 50% from the 2007 peak according to the AFR. This means that cheaper, lower quality apartments are currently being marketed, not that prices for like-for-like apartments being sold off the plan have decreased.

CBRE says "Eventually it has the potential to become its own suburb." This means that when first being built, there will be little infrastructure or amenity nearby for the initial residents. In 15 years it may turn out ok, but that is a long time to wait, especially if the average hold period for an apartment is about 5 or 6 years.

CBRE also says: "The Brisbane market is quite challenging at the moment, but my view is we are at the bottom of the market."