Brisbane Apartment Capital Growth Summary - December 2013

From RP Data:

Brisbane apartment prices (to 31 December 2013):

Month of December 2013 - up 0.4%

Quarter - up 2.4%
Year on Year - up 3.5%
Year to Date - up 3.5%
Median price based on settled sales of Brisbane apartments over the quarter - $383,000.

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

RP Data December 2013 Report

Highlights over the three months to December 2013

• Best performing capital city: Sydney +4.1 per cent 
• Weakest performing capital city: Canberra, -1.3 per cent 
• Highest rental yields: Darwin houses with gross rental yield of 6.0 per cent and Darwin Units at 6.2 per cent 
• Lowest rental yields: Melbourne houses with gross rental yield of 3.4 per cent and Melbourne units at 4.2 per cent 
• Most expensive city: Sydney with a median dwelling price of $655,250 
• Most affordable city: Hobart with a median dwelling price of $330,000

Each capital city housing market recorded positive home value growth in 2013, however, the cities driving the capital growth have been Sydney (14.5%), Perth (9.9%) and Melbourne (8.5%). Brisbane was the only other city to record value growth in excess of 5 per cent (5.1%) with each of the remaining capital cities recording annual value growth of 3.5 per cent or less.

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

Volume of Brisbane Apartment Sales

Brisbane Apartment Rents Fall

According to RP Data, rents for Brisbane apartments decreased by 1.5% over the past quarter.  From what I can tell, it is harder for landlords in Brisbane to find tenants, and rents are decreasing.

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Zero Rental Growth in Brisbane

According to RP Data, Brisbane rents have remained flat for the past 12 months, and have fallen slightly in the past quarter.

Brisbane improves in August?

Brisbane median sales prices increased in August, but are still down looking back one year.

From RP Data:

According to Mr Lawless, the most significant turnaround in market conditions can be found in Brisbane where the monthly rate of growth jumped to 1.5 per cent.

“Brisbane’s housing market has been underperforming since the onset of the GFC with home values still almost 10 per cent lower than their previous peak which was back in November 2009. The strong result for August was evident across both the detached housing and the unit markets and may potentially mark a positive turning point for Brisbane’s housing market.”

Brisbane apartment prices (to 31 August 2013):

August 2013 - up 1.2%

Quarter - down 0.6%
Year on Year - down 1.2%
Year to Date - up 0.5%
Median price based on settled sales of Brisbane apartments over the quarter - $369,250.

Comparison: Apartments and Houses

According to RP Data, when looking at the median price of properties sold in the 3 months to July 2013, apartments in Brisbane are $75,000 more affordable than houses.

Less Apartments Being Sold in Brisbane

The number of apartments being sold in Brisbane are less than the number sold in the same three month period last year.

Brisbane Units Still Going Backwards

According to RP Data, Brisbane apartment values are still declining.  From an RP Data release:

"RP Data and Rismark International today released its July housing market results which shows that capital city dwelling values increased by 1.6 per cent over the month of July after posting a solid 1.9 per cent capital gain in June. These latest monthly results now takes the cumulative recovery to 6.5 per cent since dwelling values found their trough at the end of May last year.

The July results also take the rolling quarterly change in capital city dwelling values to +2.3 per cent over the three months ending July and values are 4.9 per cent higher over the past twelve months.

According to RP Data research director Tim Lawless, despite the strong headline, the market remains somewhat of a mixed bag.

“The housing market is being buoyed by very positive conditions in Sydney, Perth and to a lesser extent Melbourne, with residential values in these cities now 3.7 per cent, 4.4 per cent and 2.4 per cent respectively higher over the past three months alone. At the other end of the scale you have cities like Adelaide, Brisbane and more recently Darwin where conditions are more sedate with dwelling values slipping lower over the past quarter.” 

Brisbane apartment prices (to 31 July 2013):
July 2013 - down 0.5%

Quarter - down 3.5%
Year on Year - down 0.3%
Year to Date - down 0.7%
Median price based on settled sales of Brisbane apartments over the quarter - $373,500.

Recent Apartment Sales in Downtown Brisbane

Evolution
  Apt 171, 1 bed, 1 bath, no car - $310,000
Grosvenor
  Apt 107 - $1.3M
Skyline
  Apt 61, 3 bed, 2 bath, 1 car - $715,000
  Apt 94, 3 bed, 2 bath, 1 car - $790,000
  Apt 363, 2 bed, 2 bath, 1 car - $587,500
Charlotte Towers
  Apt 3206, 1 bed, 1 bath, no car - $335,000
  Apt 3508, 1 bed, 1 bath, no car - $317,000
  Apt 4009, 1, bed, 1 bath, no car - $347,000
Metro 21
  Apt 3001, 2 bed, 2 bath - $553,500
Quay West
  Apt 129, 3 bed, 3 car - $1M
Riverplace
  Apt 304, 3 bed, 2 bath, 1 car - $1M
  Apt 272, 2 bed, 2 bath, 1 car - $675,000
  2 bed, 2 bath - $527,000
Festival Towers
  2 bed, 2 bath, 1 car - $457,500
  Apt 1906, 1 bed, 1 bath, 1 car - $309,000
Admiralty Quays
  Apt 78, 3 bed, 2 bath, 2 car - $920,000
  Apt 76, 1 bed, 1 bath, 1 car - $550,000
  Apt 46, 2 bed, 2 bath, 1 car - $780,000

South side apartment developments

I received an email from an agent selling apartments off-the-plan, listing four current projects.  Here are the details that were sent to me.

Fish Lane Apartments

-          48 Apartments at corner of Melbourne and Cordelia Street, South Brisbane;

-          Brisbane State High School catchment area

-          Currently under construction (completion to 5^th floor) and expected settlement on December 2013.

-          Bosch appliance (gas cooktop, microwave, oven, dishwasher) and dryer inclusive

-          One bedroom apartments with car – sold out

-          Two bedrooms two bath one car apartments North East city view facing Level 5 from $595,000

Edge Apartments 

-          48 Apartments at Manning Street, South Brisbane

-          Brisbane State High School catchment area

-          Currently complete demolishment and expected settlement late 2014

-          Bosch appliance (gas cooktop, microwave, oven, dishwasher) and dryer inclusive

-          One bedroom apartment with car – sold out

-          Two bedroom two bath one car apartment South-West facing Level 1 and 2 from $555,000

-          Current promotion with $25,000 cash back at settlement or $10,000 cash back and full furniture pack

Arena Apartments 

-          191 Apartments at Edmonstone Street, South Brisbane

-          Brisbane State High School catchment area

-          Currently commence construction, expected settlement Dec 2014 to Feb 2015

-          Bosch appliance (gas cooktop, oven, dishwasher) and dryer inclusive

-          One bedroom apartment with car - $390,000 Only two left

-          Two bedroom one bath one car - $520,000 at Level 5

-          Two bedroom two bath two cars with 86m2 internal and 45m2 court yard - $645,000 at Podium Level

-          Three bedroom full upgrade Skyhomes with three cars - $1.45m, $1.7m and $1.75m three available

Glass Factory

-          47 Apartments at Vulture Street, West End

-          Brisbane State High School catchment area

-          VIP Launching on 7^th September

-          One bedroom with car from $370,000

-          Two bedroom two bathroom with car from $555,000

-          Three bedroom two bath two car with city view at high levels from $825,000 

Will Brisbane Apartment prices go up or down?

Brisbane apartment prices did worse that Brisbane house prices over the past financial year.  There was a fall of 1.8% in Brisbane apartment prices in 2012/13.  The number of apartment sales are 13% low than 12 months ago.  This does not sound like a booming or healthy real estate market.  Some predict that apartment prices will slowly deflate, year on year, for a number of years to come.  Others predict that with low interest rates and good population growth, then prices will start to increase.  RP Data says that Brisbane will be flat for the next year.  If that is the case, no rush to buy or to sell.  Not good news for real estate agents, who rely on sales volumes to make a living.

BOQ warns about one bedroom apartments

"Bank of Queensland is worried about a surge in people borrowing money to invest in small apartments, citing Brisbane and Melbourne as concerning spots.

Of particular concern was self-managed super funds (SMSF) engaging in the tactic, BOQ CEO Stuart Grimshaw said.  He said the assumption was these one-bedroom apartments would appreciate in value, but it was  a "risky part of the market" for heavily borrowed SMSF funds.

"I don't think it's long before ASIC will start looking at some of the sales methodology," he said."

Source:  Courier Mail, page 77, 8 June 2013.

Be warned!

Ryder says Brisbane apartment market is heating up

A commentator named Terry Ryder says that the Brisbane apartment market heats up.  See story on Property Observer website.  However, take care reading this.  The article is based primarily of sales of new and off-the-plan apartments.  What is not stated is that these sales often made to foreign investors, who cannot purchase existing apartments due to FIRB rules.  When looking at resales of existing (i.e., not new) apartments, the story is different.  For example, the REIQ report, mentioned in a post yesterday, shows that less than 1 apartment per day sold in the March 2013 quarter in downtown Brisbane.

Ryder also says that consumers (I suspect he means foreign investors) have a preference for 1 bedroom apartments over 2 bedroom apartments.  My guess is that this is because new two bedroom apartments being sold by developers are overpriced.

HTW Valuer's Month in Review Report

HTW Property Valuers say in their recent monthly report that, for apartments, the Brisbane market is improving, the Gold Coast market is declining, and the Sunshine Coast market has bottomed out.

[Click chart to view]

A Declining Market

For the month of May, dwelling values declined by -1.2 per cent across the RP Data-Rismark combined capital city index. The May fall was the second consecutive month-on-month decline, with values down -0.5 per cent in April following a 2.8 per cent rise in values over the first quarter of the year.

"Given the weak housing markets of 2011 and 2012 were followed by a very robust 2013 first quarter, we may well be seeing some natural market volatility associated with vendors acquiescing and taking the opportunity to sell."

Brisbane apartment prices (to 31 May 2013):

May 2013 - down 1.7%

Quarter - down 0.4%
Year on Year - up 1.5%
Year to Date - up 1.1%

Median price based on settled sales of Brisbane apartments over the quarter - $375,000.

With a number of businesses in Brisbane continuing to make employees redundant, or implementing a wage and hiring freeze, it is hard to see things getting better in Brisbane any time soon.

Car Spaces

According to Matusik in the Courier Mail today:  "The premium for a car space within a new inner Brisbane development ranges in prince depending on the location, but the average cost is close to $75,000."  He said that apartments without carparks are harder to sell.

Real Estate Rort

The Courier Mail recently had a story regarding a real estate rort that is said to be ruining the lives of thousands.  An extract:

"Using cold calls, home visits and high-pressure seminars, marketing agents ramp up fear of an impoverished retirement to push gullible mum and dad investors into buying investment real estate.

They promise a low weekly cost to negatively gear properties, high rents and the certainty of strong capital growth in suburbs well outside of the Brisbane CBD.

But many of the units and townhouses' capital growth has been largely absent, with most buyers only learning the sad truth if they go to list the property for re-sale.

Investors have also found their weekly costs are higher than expected, putting pressure on household budgets. Rents are often far less than predicted and supposed waiting lists of tenants never materialise...."

Recent Apartment Sales in Brisbane City

• Charlotte Towers, Apt 1504, 1 bed, 1 car, sold on 9 April 2013 for $410,000
• Felix, Apt 116, 2 bedrooms, sold on 30 March 2013 for $515,000
• Aurora, Apt 234, 2 bedrooms, sold at auction on 24 March 2013 for $548,500
• Charlotte Towers, Apt 501, 1 bedroom, 1 car, sold on 21 March for $415,000
• Skyline, Apt 61, 3 bedrooms, sold on 13 March for $710,000