Buyer Confidence Improves

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.

Good or Bad Times?

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.

Lend Lease Puts On Its Big Show

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."

Show Ground Hill video

Lend Lease has released a concept video for its Showground Hill development.  It shows lots of happy people doing wonderful things at places other than Showground Hill, because Showground Hill has not been built yet.  See video for some laughs.

Show Ground Hill

Lend Lease has commenced marketing its apartment projects at the Bowen Hills Ekka redevelopment site.  See The Green.  There will be five buildings in The Green.  The registration form only refers to 1 or 2 bedroom apartments.

Lease Lease is currently in the process of completing the on-site Sales Centre, located on St Paul’s Terrace, which will showcase both the Showground’s new Master Plan and the apartment options that will be available in The Green. The Sales Centre will be opening for both VIP and Pre-Release appointments in early October 2011.