Showing posts with label apm. Show all posts
Showing posts with label apm. Show all posts

Sunday, October 7, 2012

Ugly Brisbane

Chris Joye had APM (a division of Fairfax) conduct an analysis to determine in which markets most buyers have lost or made money.  APM looked at all properties sold since January 2009, and conducted an EVR (electronic valuation) on each of these properties to determine if the current valuation was more or less than the purchase price.  In Brisbane 71% of properties sold since January 2009 were now worth less than the purchase price, according to APM's valuations.  Who says that you can't have a capital loss when buying property?

From my brief review of the property market in Brisbane (e.g., looking at listings and actual sales, talking with agents, making offers on properties, etc.) it seems to me that the situation in Brisbane is somewhat dire.  And it may not improve soon, and could get worse.  Even though interest rates are falling, a more important factor is employment -- and unemployment in Brisbane is on the increase.

See Chris Joye's Another Cut article.


Friday, March 30, 2012

AFR: Qld Property Due for Kick Start

Extract from Story in the AFR:

For years now, much of Queensland has been a home-grown testament to how property booms can go dreadfully wrong. But a select few see the parlous state of the Queensland housing market as a rare opportunity to pick up homes with great growth prospects at bargain prices. Many see the landslide election of the LNP government as a key catalyst.

Earlier in March, private equity firm Engage Capital bought 19 luxury apartments from the Bank of Scotland in The Macrossan tower in central Brisbane, developed by Macquarie Group. Engage Capital director Ben Grootemaat says he paid about $1 million less for each apartment than off-the-plan prices. He thinks Brisbane values have bottomed and he plans to sell the homes straight away, claiming there is strong demand for the right kinds of apartment at the right price. “There is a lot of demand, especially for three-bedroom residences,” he says. “We have a strong level of interest.”

He’s not the only one positive about the sunshine state. Veteran developers Ken Woodley and David Devine founded apartment developer Metro in March 2010. Since then they have bought or are in the process of buying 2500 apartments in inner-city Brisbane. Woodley says the company sold more than 450 apartments last year, and hopes for a similar result this year. The drivers he is banking on are a tight rental market and the influx of resources employees.

“Because of the huge influx from the resources companies in the office towers, I think what is going to happen within six months is people will have to pay three months’ to six months’ rent in advance to secure an apartment,” Woodley says. “There really aren’t many being built.” But he’s also hoping a confidence boost will come with the reforms new Premier Campbell Newman has promised to deliver in his first 100 days in office. One is stamp duty exemptions for the principal place of residence, which may become law on July 1, costing the government $900 million.

Combined with more interest rate cuts that most banks are still expecting, housing will become more affordable. “I would think those two things would kick start the market,” Woodley says.

The value of houses in Brisbane fell 7.6 per cent in the 12 months to the end of February, according to RP Data Rismark, the worst decline in any mainland capital. The fall in values and dearth of credit have caused a plunge in building. Mirvac research figures show per capita housing levels in Queensland have plunged to their lowest levels since about 2002. But Hoke Slaughter, Morgan Stanley head of real estate investing in Asia, believes the supply-demand picture in Queensland will be “quite attractive” when the market finally recovers. And there are certainly some bargain prices on offer.

Queensland has been littered with receivership sales. Receivers KordaMentha predicted last month there would be an increase in the volume of distressed assets put to market in the state this year as financial institutions attempted to clean up their loan books. Savills agent Greg Harris is selling new townhouses on the Gold Coast that were once priced at $635,000 for about $500,000. He says although prices have fallen 30 per cent, rents haven’t.

Australian Property Monitors senior economist Andrew Wilson says some “green shoots” are emerging in Brisbane. Home values fell 1 per cent in the three months to February, according to his figures, a slower rate of decline than last year. There were other early signs of improvement, such as an increase in home loans and positive feelings about the new government, which may improve buyer sentiment. “The whisper around is we’re just starting to get some early cycle momentum in that Brisbane market,” Wilson says. “With the election behind them, there is always a honeymoon period for the market, which can lead to a more positive attitude.”

Thursday, April 28, 2011

Brisbane Not Cataclysmic After Floods

Brisbane house prices are the lowest of any mainland capital with January's floods and a struggling state economy blamed for a 2 per cent fall in the median price over the March quarter. But analysts believe the fall is a good result compared with "cataclysmic" predictions for the city's property market in the aftermath of the natural disaster.


According to Australian Property Monitors' March Quarterly House Price Report, the Queensland capital overtook Adelaide as the most affordable mainland city with the median house price standing at $448,669, a 4.3 per cent annual drop. Brisbane unit prices remained the second cheapest in the country at $354,089, well ahead of Adelaide ($296,939).


Andrew Wilson, a senior economist from Australian Property Monitors, said the fall in median house prices from a mark of $457,889 in the December quarter was only marginal compared to some analysts' post-flood predictions.


Dr Wilson said declines of up to 15 per cent and 20 per cent for the city had been predicted.

"There were suggestions people would be reluctant to live in areas which were subject to that sort of extreme climate outcome in the future," Dr Wilson said.


"History does show us that people are very resilient, they are very attached to their neighbourhoods and governments take action to mitigate against this happening again.

"I think a two per cent fall over the quarter is a very good result considering that it will be the main hit that we get from the floods."


Dr Wilson said Brisbane had suffered from a buyer hesitancy in recent years, reflective of an underperforming Queensland economy reeling from the high dollar affecting tourism and some of the state's mines remaining inoperable.


He said the city's house prices had been going through an adjustment period following the city's strong price growth prior to the global financial crisis and the floods may have put off a stabilisation in prices.


Brisbane Times and SMH

Thursday, April 21, 2011

Apartment Prices Level with Houses

Terry Ryder published an opinion piece in The Australian today. Some extracts:

"THE planets are falling into alignment for property investors at present. We not only have a buyers' market in many key locations, but the scenario for rents and yields looks positive.

Two reports from credible research sources record a revival in rental growth in most of our major cities and predict solid rises throughout the year. "Renters should prepare for significant growth in rental prices throughout 2011, driven by accelerating economic activity, housing shortages and a depressed first-home buyer market," said APM's senior economist Andrew Wilson. Units in particular have seen a major shift in demand, with low vacancy rates for inner-city residences in most capital cities intensifying competition.

It has long been a basic tenet that houses show better capital growth than apartments, but changing lifestyle choices and affordability issues mean more households are opting to live in attached dwellings.

Last year, units showed slightly better capital growth than houses in terms of average growth across the nation, according to RP Data figures. ...

The 4 per cent average growth for dwelling rents recorded by Matusik Property Insights in the past year is very moderate - about half the historic annual rise in rents - and inconsistent with notions of a chronic dwelling shortage (as claimed by the developer lobby).

Matusik says vacancy rates drive rental growth and a general increase in vacancy rates in 2009 and much of last year caused rental growth to stall. Rental growth is now starting to return, he says, with a recent drop in vacancies.

"A falling vacancy rate is likely to put further pressure on weekly rents," Matusik says. "Rises of between 5 and 8 per cent during calendar 2011 are not out of the question.

"This in turn should lead to an increase in property values."

Saturday, January 1, 2011

Queensland Property Market Very Weak

"A NEW year will not necessarily bring renewed confidence to the southeast Queensland property market, with predictions it will struggle for at least another six months.

Economic forecaster BIS Shrapnel expects little price growth even if turnover increases. Senior project manager Angie Zigomanis said that while other states had seen a pick-up this year, Queensland's market was still very weak.

"The Queensland market collapsed a little later than other states, so it was natural it would take longer to bounce back," he said.

Property analyst Michael Matusik believes there is no end in sight for Queensland's property market slump, which is stuck in a buyer's market. He predicts sales will decline, properties will take longer to sell, there will be little or no price growth, and there will be slight falls in value during the year.

...

Mr Zigomanis predicts the first interest rate rise will be about June, and the second in the December quarter. He also believes investors may decide to re-enter the market towards the end of 2011.

Despite advertised stock levels falling away in the usual Christmas slow down, the total number of properties on the market was still 20 per cent higher than in 2009.

Australian Property Monitors predicts homebuyer activity to remain restrained in most markets early this year, with potential price growth by mid-year.

Its annual state-of-the-market report found that while Perth and Sydney would see strong price growth next year, Melbourne, Brisbane and Adelaide would experience more modest growth."

Full Story

Saturday, December 18, 2010

Which way is the market heading in Brisbane?



RP Data reports low auction clearance results for Brisbane for last week:

APM reports the following top sales for Brisbane City apartments (in the 4000 post code) -- which may not be accurate:



Saturday, July 31, 2010

Auctions Today

According to APM, there were 16 auctions in Brisbane today, and only one property was sold. What does this tell you? Ray White seems to think that the market is good for sellers:

"Ray White CBD residential principal Brendan Tutt said demand for property in and around the city had remained strong and there was a shortage of supply.

“The best time to sell is when demand exceeds supply,” he said. “And that’s what the situation is at the moment.”"

See Ray White website

Monday, April 19, 2010

Extract from Recent Matusik Email

Australian Property Monitors (APM) – a fully owned subsidiary of Fairfax Media – last month published a study which outlined what houses across Queensland (and by suburb) could be worth in three, five and ten years’ time. Needless to say, the projected growth trajectory is almost exponential, rising on average by 11% per annum across Queensland over the next decade. Prices rose by 11.7% each year, across Brisbane for example, during the noughties. Hopefully, APM did more work than just assume that the past will be repeated. But one wonders.

A check on 25 randomly selected Queensland suburbs finds a pretty consistent projected growth pattern, with values expected to rise by 30% in the next three years, then by just 10% between year four and five and then by a whopping 115% between the sixth and tenth year. By 2020, just short of 600 Queensland suburbs are expected to enjoy a median price over $1 million; and 54 areas could be, on average, priced over $2 million. The median Brisbane house price, today, is around $440,000.

What is driving the growth in five years’ time? Why does the growth rate plummet in year four? Surely there is something more than just “demand exceeding supply and strong economic growth, particularly in resources,” as quoted in the accompanying media commentary. Please APM, explain to us your methodology, as it is absent from the published forecasts.

Also puzzling is why Hamilton’s house values are expected to drop 20% over the next three years, whilst neighbouring Ascot’s prices are forecast to rise by 7% over the same period. And why just 7% – isn’t Ascot (and Hamilton for that matter) in a prime spot, with heaps of infrastructure support? Similarly, South Brisbane’s values are to drop by 8% by 2012, but West End’s values will rise by a staggering 33% or $236,000. Ditto for Surfers Paradise, down 36% in three years, versus a projected 20% jump for adjacent Broadbeach. I could go on and on. Please, APM, explain these anomalies as well.

The Gold Coast market, and in particular Surfers Paradise, has been getting a caning of late. According to the latest Queensland government valuations issued in March, ocean-front land has fallen by 30% on the coast, with residential values down 18% in Surfers Paradise since 2007, when land was last valued on the Gold Coast. According to a recent study by the REIQ, median dwelling prices in Surfers Paradise dropped by 30% during 2009.

Now there is no question that the Gold Coast is doing it tougher than the rest, with our data – which is based on cleaned up resales – showing that apartment values fell 9% during 2008 and a further 4% last year. But ocean-front apartment values – in Surfers Paradise at least – and again based on individual resale analysis, actually rose last year. Up by 8.9%!

There are two messages here. Firstly, in order to get a true handle on the residential market it pays dividends to narrow down the sample set and investigate individual resales. Sweeping statements – and especially based on suburb, or worse still, postcode analysis – are nearly always incorrect.

The second message comes in the form of a question. Why does the media (and too many punters, as well) accept these forecasts as if they are gospel? I understand why the Fairfax Media might, but the Murdoch Press? Maybe digging around a bit is too much work for journos these days. A recent study commissioned by crikey.com suggests this is the case, with nearly 55% of the stories published across ten major Australian newspapers late last year being driven by media releases or public relations firms.

So what do I think prices will do over the next decade? In short, my answer is…not as much as they did over the last ten years.

Dwellings are overpriced but not (yet, anyway) oversupplied. The current “boom” is likely to run out of puff within the next twelve months, on the back of rising interest rates and declining affordability. We could “crash and burn” like the US recently did or go through a long, drawn-out adjustment, as happened in the 1990s. The latter means that residential values will be flat until affordability is rebuilt by a combination of gradual increases in household incomes and cyclical declines in interest rates. Given this scenario, growth over 5% per annum would be a strong result.

It’s back to the future, if you ask me.

Source: www.matusik.com.au

Sunday, January 31, 2010

Auction Results

This is supposed to be selling season. APM reports that only 8 properties in Brisbane sold at auction this Saturday. No units were reported as being sold at auction. Although auctions are not as common in Brisbane as in Melbourne, and many agents don't report to APM, this is not a promising sign.

Saturday, January 30, 2010

Timing the Market - Letter to the Editor

A good letter from yesterday's AFR:

"The latest APM report clearly shows that house prices are rising mainly because of resurgent interest in high-end properties; but many people will sadly delude themselves that this is a sure sign of capital growth in their own, low to mid-end houses or investment properties. They should understand that the property markets do not all move in the same way at the same time.

By selling and trading up to a more prestigious area now, there is the real risk of "buying into the rise" and paying a premium to do so. Time in the market , or timing the market? The time to buy into high-end property was when no one could service the debt or sell it - during the middle of the financial crisis. It is very difficult to do well in an asset class when everyone else is interested in it."
Chris Embery, South Australia.

Friday, January 29, 2010

RP Data - Rismark December 2009 report

Units outperform houses

2009 saw Australian unit values increase by 13.5 per cent compared with house values up 10.4 per cent. The trend was the consistent across every capital city, with units returning a strong gain over the year.

According to Mr Lawless, “The higher gains in the unit market are a deviation from normal performances. Historically houses have tended to outperform units. The recent reversal in fortunes has occurred due to more buyers leaning towards units because they have a more affordable price tag and are often located in more strategic locations in relation to transport and amenity than many detached housing options. Other factors may also include changing housing preferences, particularly amongst baby boomers, and more highly targeted unit developments being delivered to the market.”

Brisbane The Brisbane market remained comparatively subdued during 2009 with values increasing by 7.3 per cent over the year. The comparatively weak performance can partly be attributed to the strong gains recorded in 2007 where Brisbane values gained 24.6 per cent over the year. Gross rental yields in Brisbane remain above the national average with houses returning 4.4 per cent and units returning 5.0 per cent. 2010 is likely to see Brisbane outperform the national average due to the fact it is in a later stage of the cycle, together with ongoing strong population growth and the benefit of several major infrastructure projects coming to fruition. The median house price in Brisbane is now $463,000 and the median unit price $383,600

See RP Data Report

"December research undertaken by RP Data and Rismark International showed Brisbane property values rose by 7.3 per cent in 2009, well below the national average of 11.5 per cent.

This confirmed the findings of the Australian Property Monitors House Price Report, released earlier this week,which RP Data disputed at the time.

RP Data research director Tim Lawless said better performing capitals in 2009 included Darwin (16.6 per cent), Melbourne (15.6 per cent), Canberra (14.7 per cent), Hobart (12.4 per cent) and Sydney (11.4 per cent).

But Mr Lawless said he expected 2010 to be a very different story for the Sunshine State capital.

"In Brisbane, we have vacancy rates of around three per cent, very strong population growth and not a great deal of new housing being released. So that's the dynamic that's pushing prices upwards," he said.

Brisbane Times


Wednesday, January 27, 2010

Ice Cream Lickers Are Back

"THEY are usually like a thorn in the flesh of real estate agents but this summer the "ice-cream lickers" are responsible for the early stages of a recovery in the holiday home market.

Real estate agents describe holidaymakers who inspect properties after looking at the advertisements in the windows of real estate agencies, yet rarely follow through with a purchase, as "ice-cream lickers".

Agents are reporting that it is these interested parties who are snapping up the bargain-priced homes in beach locations along the east coast. ...

Exclusive destinations such as Palm Beach, in Sydney's north, and Noosa, north of Brisbane, had also reported more interest.

Real estate agent Marcus Bengtsson at Tom Offermann Real Estate in Noosa said there were "absolutely" more inquiries this year compared with last year. "People come up here and fall in love with it," he said.

"It might be on their first visit or the second (that they decide to buy a property). They look at the local property magazines while lying by the pool."

Joe Buchanan of Firstlight International -- the offshoot of private equity player Blue Sky Capital -- said he now had 30 names on a reserve list for those wishing to acquire a share of the company's yet-to-be-developed luxury beachfront apartments on Noosa's Hastings Street.

Up to eight of the 20 units will be priced between $12m and $16m for individual ownership, while the remainder will be co-owned. "Over the Christmas holiday period, we have maybe had eight to 10 inquiries," he said.

While property prices in some holiday destinations have recently staged a recovery, they have fallen in price by about 10 per cent since the start of the global financial crisis, defying the trend of a stronger housing recovery in state capitals.

APM economist Matthew Bell said that in Queensland and NSW during December, prices were still not back to the levels they were during the boom more than two years ago, despite rising between 1 and 3.5 percentage points during the past six months.

Hotel and resorts analyst Dean Dransfield of Dransfield Hotels & Resorts said securing sales from holidaymakers could be challenging. "You have to call in bankers (and such people) and that type of work people don't want to do on holiday," Mr Dransfield said." Source: The Australian

Saturday, January 23, 2010

Rents in 2010

  • 2009 weak year for rent growth
  • Still down in 2010
  • But will rise within months

RENTS across Australia stagnated and in some cases even fell in the December quarter, but are expected to rise later this year.

A report to be released by Australian Property Monitors today says last year was the weakest for national rental growth since 2002.

While APM flags a strong lift in rents is likely this year, property managers and landlords reported that the market had remained soft so far this month, which is typically the busiest month for the rental market.

Chris Rolls, managing director of the Gold Coast and Brisbane residential property manager Rental Express, said: "We have found this is the slowest start to the year for the last five years."

Mr Rolls, who owns a four-bedroom rental property in Brisbane suburb Kelvin Grove, said the contract for the property came up for renewal in 10 days and he had opted to keep the rent at $520 a week in the hope that the current tenants would not leave.

"The risk is that if you increase the rent, and they don't pay it and instead move out, I won't get the same rent. It was top rent 12 months ago," Mr Rolls said.


Harcourts New Farm owner and property manager Kylie Pridham agreed the tenant's reprieve - brought about by the global financial crisis - would not last long, with vacancy rates in Brisbane to remain about three per cent.

"We have had to reduce [the rent] on some properties by $50 a week, but that won't last," Ms Pridham told theAustralian Financial Review.

"As soon as the lease finishes in six months time those rents will be back up."

Source: Brisbane Times

Interest in the sale may be strong but the general property outlook for the year is a little more sobering, according to property analyst Michael Matusik. Mr Matusik warned that property was likely to be oversupplied this year. He cited factors including a shrinking average household size, less impact than expected from overseas migration and lots of empty houses around the country.

Mr Matusik said that after decades of overconsuming property, the past year had seen a more frugal mindset which could continue.

And he said the rental market was not as tight as some commentators claimed. Rental analyst Louis Christopher of SQM research said claims of an imminent increase in rents were optimistic.

"There is no evidence to suggest we will see significant increases in rents," Mr Christopher said. "Despite recent aggressive forecasts, increases of between 3-5 per cent in most areas are more likely, depending on what you are renting and where," he said.

His calculations put Brisbane's vacancy rate at 3.4 per cent last month, with 8603 homes available for rent. This is up nearly half a per cent from the previous month.

Source: Courier Mail

Friday, October 16, 2009

Auction Results and Monday Morning

On Monday morning, the newspapers often have an article about the health of the property market, based on the weekend's auction results report by APM. This is often misleading, for the following reasons:
  • The APM results that are the basis for the report are often incomplete, as a number of auction results have not yet been reported.
  • Brisbane has far fewer auction sales than Melbourne and Sydney - so the report does not take into account sales other than by auction which is the bulk of the sales in Brisbane
  • The APM results focus on Saturday auctions, and do not capture auctions during the week. Ray White, for example, often has Friday morning auctions.
  • The report, for the most part, relies on agents reporting to APM. If the agent has a bad result, there is less incentive to report.
Read Chris Joye here on this topic. This article makes a similar comment.

Saturday, May 10, 2008

Brisbane Median House Price Growth

The following are reported Brisbane median house price growth rates, reported by various data providers:

March 08 Quarter

ABS: 2.8%
RP Data: 2.1%
Residex: 3.8%
APM: 2%

April 07 to March 08

ABS: 20.8%
RP Data: 17.3%
Residex: 21.2%
APM: 18.4%