Showing posts with label Brisbane apartment. Show all posts
Showing posts with label Brisbane apartment. Show all posts

Sunday, November 13, 2022

Brisbane Apartment Growth Looks Promising

The AFR had this story:

"... As rising funding constrained development in the face of rising demand from a return of foreign migrants, and changes to household formation that meant more single-person households, the Queensland capital was going to suffer from the most acute undersupply, Mr Warner said.

“Brisbane is the worst placed in my view,” he said.

“The supply is so low and the Queensland population growth is strong and likely to stay strong because we’ve had strong interstate migration through the pandemic and now overseas migration is picking up as well.”

The decade-long run-up to the 2032 Olympic Games was going to sustain a level of activity in south-east Queensland region, he said.

“We’ve got a pipeline of infrastructure projects with the Olympics for the next decade that’s going to keep employment strong and keep driving population into south-east Queensland,” Mr Warner said.

The current supply slated for the city was about half of its underlying demand, he said.

More widely, the concern was about not just the number of new apartments in the pipeline but the type.

“Most developments progressing to construction right now are aimed at owner occupiers, particularly downsizers with plenty of equity, and this will do little to alleviate the rental market crisis that is already upon us,” he said."

See Rising borrowing costs put the brakes on apartment pipeline (AFR 13 November 2022)

https://www.afr.com/property/residential/rising-borrowing-costs-put-the-brakes-on-apartment-pipeline-20221110-p5bx7u


Saturday, April 4, 2020

Impact of COVID-19 on Brisbane Apartment market


Short term impacts of COVID-19
  • Lock-down laws are impacting real estate sales.  Open houses are banned.  
  • Many auctions have been cancelled.    Public and onsite auctions are banned.
  • Apartment buildings have closed their facilities, such as pools and gyms.  Some apartments have elevator restrictions (e.g. no more than 2 people or 1 family in an elevator at the same time.)
  • Some tenants are asking for rent relief, despite a government scheme to assist tenants: See Courier Mail
  • Some tenants are not renewing leases or going month-to-month.
  • Vacation rentals are sitting empty.
  • One property manager has cancelled all leases (probably illegally) - This property manager rents from property owners and then rents out to short term guests.  The landlords' rent has gone to zero.
  • Holiday and short term rental apartments are entering the long term rental market, at discount prices: Courier Mail
  • Some real estate agent's are misleading the market, saying things are good. For example, "there are still buyers out there wanting to buy" (but not saying at low prices), "real estate will become highly sought-after as we move forward", "property is still the safest haven to have your money in", "there are still positive things happening for buyers and landlords".
Longer term impacts of COVID-19

One agent says:

"Like most industries, it is not hard to foresee a coming downturn in the property market.  The closure of businesses, loss of employment, reduced hours, rental defaults plus the myriad of other inter-linked factors will have negative flow on impacts."

In my opinion:
  • Negative gearing will be seen for what it is -- making a loss.  In times of crisis, people understand the risk even more.  Going forward, investors will be less likely to take on the risk of negatively gearing investment properties.  So prices will fall.
  • One bedroom apartments and apartments with no balconies will be less popular.  Owners and tenants will realise living in (and not leaving) such apartments for a long time is not enjoyable. The virus or similar will come back again.
  • Large over-crowded apartment buildings with less elevator capacity will be less popular.  Some buildings have now implemented "two people only" rules for elevators.  Being in a large Meriton building, on level 50, with no balcony, and crowded elevators, with 12 small apartments per floor, does not look appealing.
  • Apartments with balconies and views will be more appealing.
  • Older people are likely to die.  This may create a surge of supply, especially in areas where older people live.
  • There will be less foreign students, and so less renters for city apartments.
  • There will be less foreign buyers.
  • Australian beach resorts will become more popular, helping beach vacation rentals.  International and cruise vacations will become less popular.
  • People are earning less, eating into savings (which were possible deposits), less likely to change jobs or move place of residence and be more risk adverse.  Prices (values) will decrease and stay flat for a while.
  • Off the plan apartment sales will drop off.
  • Renters will choose higher quality apartments over smaller apartments designed for foreign students.

Saturday, March 3, 2018

No Price Growth for Brisbane Apartments

RP Data CoreLogic have issued their Home Value Index Report for March 2018.

The medium price for apartments has dropped from $400,000 in April 2017 and $389,000 in August 2014 to $383,000.   This price decline does not take into account stamp duty or agents fees.  For example, a person buying an apartment for $400,000 a year ago, really paid $412,000 including stamp duty, and selling it for $380,000 today is only receiving about $368,000 after agents fees.  So the loss is actually $44,000 or about 10% loss.  It appears that the loss is going to increase over the next few years.

I suspect that anyone who purchased an apartment after 2010 would be selling at a significant loss if having to sell today.

CoreLogic head of research, Tim Lawless, said, “The overall softening in the market becomes more evident when looking at the change in values over the past three months.” 


Brisbane apartment prices (to 28 February 2018)
February 2018 - no change
Quarter - down 0.3%
Year to Date - up 0.1%
Year on Year - down 0.6% 
Median value - $383,000

Saturday, July 15, 2017

Brisbane Off-the-plan resales

In talking with real estate agents in inner Brisbane, they are telling me (for what it is worth) that:
  • Resale prices of new apartments that the seller purchased off-the-plan a few years ago are often at least 10% to 15% less than the seller paid.
  • Larger apartments targeted at owner-occupiers are selling well, especially in the $1.5M plus price bracket.
  • Interstate migration from Sydney and Melbourne is increasing, and those moving are looking to buy.
  • Apartments targeted at investors are not selling well.
  • There are few Chinese buyers in Brisbane, especially compared with Sydney which is regarded as a safe international city.

Monday, June 19, 2017

Different Brisbane Trends

There are different trends for the apartment market in different parts of Brisbane.  For example, West End and The Valley may be oversupplied at present, but there is an undersupply of large quality apartments in the Western Suburbs.

Place Projects have produced an interesting report, in two parts, that is worth reviewing:

See Part 1 and Part 2

From the report:

"It’s no secret that the Brisbane apartment market has suffered in recent periods. As shown in the graph below, each of the three regions have experienced varying amounts of decline over the past two years.

Over the past 12 month period, Brisbane’s Inner Ring has experienced the largest decline in median apartment prices, decreasing by 3.5%. This was followed by the Middle Ring, declining by 2.7% over the period, whilst apartment prices in Brisbane’s Outer ring decreased by just 0.7% over the period. 


The Inner Ring does however, remain to be the most expensive region to purchase an apartment. During the six month period ending December 2016 apartment prices sat at $468,000, compared to $445,000 in the Middle Ring and $380,000 in Brisbane’s Outer Ring. Longer term, the Middle ring has experienced the highest price growth, with median apartment prices increasing by 3.5% per annum over the past ten years, followed by the Inner Ring and the Outer Ring, recording 2.7% and 2.3% price growth per annum respectively over the past ten year period."

Saturday, June 17, 2017

Brisbane off-the-plan market "subdued"

Place Real Estate Agents issue a quarterly report as to Brisbane apartment sales.  It is worth studying.  See Place Projects website.

From their recent report for the March 2017 quarter:

As expected, the March 2017 quarter brought another period of subdued sales activity across Inner Brisbane’s off the plan apartment market as sales momentum continues to soften.

The Inner Brisbane apartment market saw just 272 unconditional transactions take place throughout the rst quarter of 2017, a substantial decline of 67% from the same period 12 months prior, which recorded 828 unconditional sales. Meanwhile, the weighted average sale price recovered over the past 12 month period, increasing by 5% from $602,415 in the March 2016 period to $629,963 in the March 2017 period.
  • Inner Brisbane’s off the plan apartment market recorded 272 unconditional transactions over the March quarter, the lowest level of sales since the June 2011 period. This re ects a 13.7% decline from the December 2016 quarter.
  • Just over $171.4 million worth of apartment sales were recorded throughout the quarter.
  • There are currently 67 projects being sold off the plan in Inner Brisbane, with just two projects reporting for the rst time during the quarter. These include Augustus Residences and The One, adding an additional 151 apartments to the market.
  • A weighted average sale price of $629,963 was recorded for
    the period, an increase of 5% from the corresponding period
    12 months prior. This is indicative of a slight change in the product mix across the market, resulting in higher sale prices.

  • Augustus Residences, located in Toowong, was the top performer for the quarter, recording 61 unconditional transactions. 
The Brisbane CBD saw very little activity during the March 2017 quarter, with just 16 unconditional transactions recorded for the period. With no new projects released throughout the quarter, the CBD continues to sell down current apartment stock.


A weighted average sale price of $668,750 was recorded for the three month period, re ecting a 3.8% decline from the previous quarter, indicating a slight increase in the level of investment stock that transacted during the period. Brisbane Skytower recorded the highest number of unconditional transactions across the CBD market during the March quarter, recording a total of 12 sales.

The majority of transactions that occurred within the precinct were in two bedroom con gurations, accounting for 88% of total sales. The remaining 12% of transactions for the period were in one bedroom configurations.

A total of 225 out of 1,498 apartments remain for sale across four projects in the CBD including The Midtown, 111 Quay Apartments, Skytower and Mary Lane. 



Friday, June 16, 2017

REIQ says Brisbane apartment market is oversupplied

The REIQ reports, unsurprisingly, that the supply of apartments in Brisbane is showing an upwards trend, and is an oversupplied market.  I suspect the trend is that things will get worse for sellers, rather than better, over the next 12 months.

Monday, May 1, 2017

Brisbane Apartment Prices in Freefall

The latest CoreLogic report, issued today, shows that the prices of Brisbane apartments are falling, dramatically.
See https://issuu.com/corelogicaustralia/docs/2017-05-01--corelogichomevalueindex

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

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

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

Saturday, February 4, 2017

Valuer says Brisbane will get worse

Independent property valuers Herron Todd White say that the Brisbane apartment market is about to enter a decline.  It looks like values will go down.  We have not had a boom in Brisbane since 2007.  Who said property prices double every ten years?  If you bought in 2007, you may still be underwater!

The report says:
"Brisbane property has been a heartbreaker over the past few years, offering so much promise, but failing to live up to the hype – and anyone hoping 2017 would prove to be “The Year of the Brissie” will probably be disappointed again.

The hoodoo continues to be employment-fuelled interstate migration and, truth be told, we can’t see anything on the economic horizon to suggest southern buyers will start heading here in droves.
That’s not to say we should be ignored - on the contrary, Brisbane is one of the country’s most forgiving capital city markets. There are very few disappointed long-term buyers in our sunshine- state’s big city, provided they stuck with the fundamentals and bought the right property in the right position at the right price. With this historic performance as a foundation, there are opportunities to get into Brisbane and hold tight that will leave you feeling very satis ed with your decision come a market cycle or two.

Herron Todd White Brisbane has always been keen on well located second hand units as a strategy for those trying to get a foot on the market. They usually offer an affordable option in a great location, and while capital gains aren’t always mind blowing, good tenant demand ensures you can continue to service the mortgage without too much stress. There is, however, a very real oversupply risk looming for investor units in our city as new stock struggles to find demand. This is having a negative flow on to our traditionally solid second-hand unit market. If you buy investor-grade unit stock in particular – new or old – please tread with caution in 2017."


Sunday, June 5, 2016

Brisbane real estate agents say "sell now!"

I receive many newsletters and emails from real estate agents in Brisbane, especially those who specialise in Brisbane apartment resales.  All are advising that now is the time to sell, not the time to buy.  Some examples:

Position Property, Brad Munro:, Autumn 2016 newsletter
  • "There is no denying that there are concerns over just how many apartments are being built across Brisbane."
  • "The concern I have is that many of these developments are being sold anywhere from 80% to 100% to inventors.  Many of these buildings have 200-300 or more apartments -- there needs to be a lot of tenants to fill them all."
  • "Rental prices will decrease which then affects the investment return for the investor.  Even now, with only a limited number of these developments being finished, the rental prices are down from what the investor was promised.  I believe there is more pain to come."
  • "There are fewer buyers in the market."
  • "I am really concerned as to what the next 3 years has in store."
  • "I have no doubt that selling in the next 6 months is going to achieve a better result than waiting until next year."
Tessa Residential CBD Market Overview
  • "We anticipate a stable and consistent market place in 2016..."
  • Oversupply "is a reality throughout suburbs such as Newstead, Bowen Hills, South Brisbane and West End and as a result is having an impact on the rental market with rents across the City starting to soften."
  • "We believe 2016 will represent the optimum time for sellers who are considering cashing in on the improved market, which has continued to grow since June 2013."
So sell now if you are thinking of selling in the next 3 years, but don't buy now -- wait till next year!

Friday, June 3, 2016

HTW view on Brisbane apartment market

There has been a lot of talk about our inner city unit market with an oversupply situation that’s graduated from 'looming' to 'inevitable'. This sector is a huge concern. There are still heaps of projects that are yet to come online or are in the planning phase. They are also predominantly investor driven and this could be a recipe for a lot of heartache – particularly as a large percentage of buyers are interstate and international investors. Add to this the tighter restrictions on lending to foreign investors and you can see where it might all be heading. As we’ve been saying for some time – in terms of inner city units, the best per formers are, and will continue to be, those projects designed with owner-occupiers in mind.

If you’re wondering how tenant demand is tracking, we can con rm current data shows vacancy rates for houses at 2.5% and units at 3.2% (unit vacancy increased by 0.3% year-on-year). The combined  vacancy rate for all property types is 2.7%. The general rule is any result below 2% demonstrates an under supply of rentals, 2% to 3% seems balance, and over 3% represents oversupply. From the numbers above, it’s easy to recognise where the weak sector is in the market.


See June Month in Review

Monday, March 14, 2016

Recent Apartment Sales in Brisbane 4000

Here are some recent sales (all early 2016) with actual sales prices of apartments in Brisbane Postcode 4000.  These are all B and C quality buildings, and so expect to pay more for A quality:
  • Skyline, Apt 91, 30 Macrossan Street, 3 bedrooms, 2 bathrooms, 1 car - $747,000
  • Skyline, Apt 261, 30 Macrossan Street, 3 bedrooms, 2 bathrooms, 2 cars - $800,000
  • Skyline, Apt 41, 30 Macrossan Street, 3 bedrooms, 2 bathrooms, 1 car - $731,500
  • Festival Towers, Apt 3605, 2 bed, 2 bath, 1 car - $529,000
  • Festival Towers, Apt 4006, 2 bed, 2 bath, 1 car - $570,000
  • Festival Towers, Apt 1805, 1 bed, 1 bath, no car - $342,500
  • Festival Towers, Apt 2503, 2 bed, 1 bath, 1 car - $499,000
  • Charlotte Towers, Apt 508, 1 bed, 1 bath, no car - $350,000
  • Charlotte Towers, Apt 2902, 2 bed, 2 bath, 1 car - $540,000
  • M on Mary, Apt 3204, 1 bed, 1 bath, no car - $356,000
  • M on Mary, Apt 607, 1 bed, 1 bath, no car - $360,000
  • M on Mary, Apt 2609, 1 bed, 1 bath, no car - $327,000
  • Felix, Apt 303, 2 bed, 2 bath, 1 car - $600,000
  • Meriton Herschel St (Infinity), 2 bed, 2 bath, no car - $580,000
  • Meriton Soleil - 2 bed, 2 bath, 1 car - $575,000
  • Vue, 92 Quay St, Apt 2301, 2 bed, 2 bath, 1 car - $460,000
  • Vue, 92 Quay St, Apt 2602, 2 bed, 2 bath, 1 car - $437,500

Sunday, February 7, 2016

Brisbane Prediction

"Brisbane Avoid: High density apartments in the CBD, West End and Fortitude Valley. Recommend: Character houses in low density, established areas with good schools, transport and lots of renovation activity."

See Property Observer

Saturday, September 19, 2015

Ray White Agent's View of Brisbane apartment market

From an email from a Brisbane Ray White agent:

"The concerns for property owners for the next 12-18 months is that with around 23,000 new apartments under construction around the CBD & fringe, is that it will have a volcano effect and force property prices and rent down due to the over supply. 

We are seeing this happen at the moment in Surfers Paradise with 9/10 owners are losing money on their property. Sydney and Melbourne have already seen this happen. We are recommending it's crucial to have a think what your property plans are for the next few years. 

If you are having any thoughts of selling, don't hesitate to get in touch before it's too late. This new stock coming to the Brisbane market is not far away. 

Good news is! The market is strong at the moment."

Saturday, August 1, 2015

Prediction that Brisbane Rents will not fall

"Brisbane's booming inner-city apartment construction market has led many to speculate a fall in rental prices could ensue in late 2015 as the market is flooded.  However, Dr Wilson said that in Melbourne, where there have been record levels of inner-city apartment developments, rents have continued to increase, which could bode well for Brisbane investors, though not so much for renters."

Sunday, May 31, 2015

Leave Your Money in the Bank

"The latest research shows that only 10% of sales in the Brisbane inner-city unit market are to owner-occupiers. Investors are buying 90% of the stock and the great majority of them are distant investors – people from interstate and overseas. Many will wish they had left their money in the bank.
Vacancies in Brisbane’s inner-city suburbs range from 4% or 6.5% - and that’s before all the new supply now under construction hits the rental market. BIS Shrapnel research shows that a record number of new apartments will be completed this year, but more will be finished next year and even more the year after. These numbers are a red flag for sensible buyers.
Brisbane, like Melbourne and the Gold Coast, is building far too many apartments because they’re not being created for local consumption – they’re being conceived for sale to unsuspecting foreign buyers."

Sunday, April 5, 2015

Supply Greater than Demand in Brisbane

4BC Real Estate Guru Keven Turner has downplayed any risk of undersupply in the Brisbane apartment market despite recent reports of an upcoming boom in demand.
Speaking to Mark Braybook on 4BC Mornings, Mr Turner said that the supply of new units far outweighs recent increases in demand.
"If you look at the number of approvals sort of going forward, we've only got something like 2000 or 1500 to 2000 units in the pipeline which is not even going to meet demand."
Mr Turner said Melbourne is at a far greater risk of oversupply with over 20 000 new units being planned or developed.
However Mr Turner has warned potential buyers in Brisbane to be prepared to hold onto properties well into the long term if they are seeking to make a profit.  
"Developers actually have a huge amount of control over new stock, new development stock, so they pretty much do actually control that market.  If you find that you're buying a unit you're probably gonna have to hold onto it for anything up to five to 10 years to get something value back out of it." 
Source 4BC Radio

Friday, April 3, 2015

Sydney Strong, Brisbane About to Boom?

"Since mid-2013, the average gross rental yield across Australia’s combined capital cities has reduced from 4.3 per cent down to 3.6 per cent. Gross rental yields are now approaching record lows in both Melbourne and Sydney at 3.3 per cent and 3.6 per cent respectively.
Mr Lawless said the latest housing market data is likely to present a further challenge for the Reserve Bank when they deliberate interest rate settings next week. 
"Despite the headwinds of softer labour markets, very low rental yields, increased oversight on lending conditions and heightened economic uncertainty, historically low mortgage rates appear to be adding further stimulus to the housing market, albeit that stimulus is largely being felt in Sydney."
With Sydney now overpriced, Brisbane looks more promising.
Brisbane apartment prices (to 31 March 2015):
March 2015 - up 1.8%
Quarter - up 2.1%
Year to Date - up 2.1%
Year on Year - up 3%
Median price based on settled sales of Brisbane apartments over the quarter - $380,000


Thursday, April 2, 2015

Start Sounding the Alarm!

Australia will run into a glut of apartments in just two years led by Melbourne and Brisbane - but other cities are also building more than they need, says BIS Shrapnel.

The forecaster, which started warning about an apartment overhang in Melbourne a year ago, is now also ramping up warnings about Brisbane and Adelaide. 

Brisbane's voracious appetite for apartment construction has resulted in a stock surplus that dates back at least to 2006, but that glut is about to triple from 5000 from last financial year to 15,000 by next year, BIS Shrapnel says.
See AFR

Wednesday, April 1, 2015

No oversupply in Inner Brisbane for Apartments?

"Brisbane's inner-city apartment market is a long way from being oversupplied, according to leading real estate adviser Urbis.
Issuing its detailed inner-city report on Wednesday, the group reported that a record 1500 sales had been made in the December quarter from 111 apartment projects. The September quarter recorded 1400 and such numbers have not been seen since 2007.
Urbis economic and market research director Mal Aikman said future supply was "not an issue" and that investors from Sydney and Melbourne were seeing value in Brisbane.
"Looking forward what we find is that in the first and second quarters of 2015 there are about 5000 apartments available for sale," Mr Aikman said.  "At the current rate of demand, that would equate to a sales rate of about 4000 apartments. So demand is slightly behind, but not significantly, and we're a long way from saying there's an oversupply or a glut."
Urbis noted that the Brisbane central business district had a huge surge in sales almost entirely driven by AMP Capital and Billbergia's Skytower, which saw 415 sales worth $267 million."
In my opinion, Urbis is overly optimistic.  There may be buyers for off the plan apartments, but will there be enough renters?  I suspect that most buyers in Brisbane Skytower are from China.

The Brisbane Times provides this gloss:

He admitted prices for new apartments were highly unlikely to rise in the coming year due to the increased supply and stopped short of guaranteeing they would fall.  However, he indicated tumbling price tags to live in the inner-city were probable.  "Our view is prices aren't likely to rise but whether they will fall really depends on the developers," he said.