Showing posts with label capital growth. Show all posts
Showing posts with label capital growth. Show all posts

Monday, January 27, 2020

Brisbane Apartments compared with other capital cities

In the AFR on 23 January 2020 (page 3), there is an article titled "Rebound Sends Property to Records".  However, reading carefully, this does not apply to Brisbane apartments.

The graph in the article, sourced from Domain, shows that Brisbane apartment prices have fallen over the past 3 years and are not at a record.  A Brisbane apartment costs the same today as in about 2013.

Moreover, Brisbane apartments are cheaper on average than Sydney, Melbourne, Canberra and Hobart.

Is there a structural problem in Brisbane?  What is holding back price growth in Brisbane?  Poor quality apartment developments?  Ineffective State and local government?  Lack of infrastructure in inner city areas?  No population growth?  Fewer tourists?

Is it that approximately 40% of the people working in Brisbane work for government or government owned corporations?

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."

Monday, June 6, 2016

Brisbane Apartment Prices Up Slightly: RP Data CoreLogic report for May 2016

Brisbane apartment prices (to 31 May 2016):
May 2016 - up 1.3%
Quarter - up 0.8%
Year to Date - up 2.3%
Year on Year - up 2.4%  (Sydney is up 15%, Melbourne up 8%)
Median price based on settled sales of Brisbane apartments over the quarter - $385,000

Friday, March 11, 2016

Will Brisbane Prices Increase This Year?

CoreLogic recently reported:

"The trend in home value growth is showing signs of increasing in those markets that have previously underperformed. These include Brisbane, Adelaide, Hobart and Canberra. Affordability constraints as apparent in these cities and rental yields been compressed to the same extent as what they have in Melbourne or Sydney. Home values increased in Brisbane by 5.5% over the past year, which is the fastest annual rate of value growth in a year."

The above 5.5% included houses and apartments.  Below is the information just for apartments, which is not as good.  The question is whether Brisbane will have capital appreciation across the board, or whether it will be limited to certain suburbs, or to houses (not apartments), or to houses and older apartments in better locations.  There appears to be great oversupply of new smaller apartments, in locations such as Newstead and South Brisbane, so capital appreciation of this dwelling type seems doubtful.

Brisbane apartment prices (to 29 February 2016):
February 2016 - down 1%
Quarter - up 0.9%
Year to Date - up 1.5%
Year on Year - up 3%
Median price based on settled sales of Brisbane apartments over the quarter - $391,000 (which is less than reported for the quarter ending May 2015).

Wednesday, March 9, 2016

Property Prices Double Every 10 years?

I have been to seminars by property agents and promotors, where they say that property is a sure investment because property prices double every 7 to 10 years.  CoreLogic debunks that "rule".

"Melbourne is the only capital city housing market in which home values have doubled over the past decade.  In fact, many cities are a long way from having doubled with values in Brisbane, Adelaide, Perth, Hobart and Canberra having all increased by less than 50% over the past decade."

See CoreLogic Report

Thursday, September 17, 2015

Buying Activity and Capital Gains Not Strong

But not everyone is as optimistic about Queensland’s prospects.
Property analyst Louis Christopher of SQM Research said the state’s comparatively sluggish economy meant “buying activity hasn’t been strong”.
“If Brisbane is so good, why aren’t we seeing capital gains now?” he challenged.
“Yes, we are bullishly positive on the southeast Queensland market, and it’s a lot more affordable than Sydney — but there are reasons for that,” Mr Christopher said.
He said that the Queensland economy was still suffering from the austerity of the former Liberal Government, along with the mining downturn.  But there were hopes the new Labor Government would “open up its purse strings” and kickstart a recovery.
“There’s still a lot of stock about, and the economy is still quite patchy,” Mr Christopher said.
“Nevertheless, we are a little bit more positive on the market. We do agree it’s more affordable, on a rental basis and on an absolute price-to-wages basis.”
He said the Gold Coast was likely to see capital gains of between seven and 11 per cent over the next 12 months, but that Brisbane would be more restrained.
Source:  News.com.au

Monday, June 1, 2015

Capital city dwelling values rise 9% over past 12 months but capital losses in May

From RP Data:

Today's results revealed the pace of home value growth stalled in May with dwelling values down 0.9% over the month.  After an increase in dwelling values of 3.8 per cent over the first four months of the year, the May CoreLogic RP Data Home Value Index results out today recorded a drop of 0.9 per cent for the month across the combined capitals index; the first month-on-month fall since November last year.

Mr Lawless said, "Over the past three years, dwelling values have risen more than three times as fast as rents. Dwelling values are 24.2 per cent higher across the combined capitals over the past three years while weekly rents have risen by only 7.2 per cent. The net result is that gross rental yields have been compressed from 4.3 per cent back in 2012 to the current average gross yield of 3.7 per cent across the combined capital city index," he said.


Brisbane apartment prices (to 31 May 2015):
May 2015 - up 0.1%
Quarter - up 1.4%
Year to Date - up 1.7%
Year on Year - up 2%
Median price based on settled sales of Brisbane apartments over the quarter - $393,500


Saturday, April 4, 2015

Property is a very long term investment

"Across resales of homes throughout the December 2014 quarter, those homes that were held for only a short period of time proved to be much more susceptible to loss. Although home values increased over the 2014 calendar year, 13.1% of owners who purchased and resold in the same year recorded a gross loss (resales in less than a year accounted for just 1.6% of all resales over the year). Homes resold after being held for between 3 and 5 years were the most likely to record a gross loss (17.1%) followed by those held between 5 and 7 years (15.3%). The data also reiterates the long-term nature of housing investment as well as relatively weaker growth in values over the past decade. Of those homes resold between 10 and 15 years from the previous purchase only 48.4% sold for double their original purchase price with the proportion rising to 95.0% for homes sold after 15 years of ownership."

Source: RP Data Pain Gain Report


 More than 10% of resellers in Brisbane suffered capital losses:


Sunday, March 15, 2015

Brisbane the laggard, says Macquarie

"Brisbane is still very much the laggard for this cycle given the sluggish domestic economy, with periodic price falls still common particularly for the Brisbane unit market," Macquarie's latest report noted.
It was in part because Queensland continued to show population growth moderation as the recent mining boom subsided.
The lagging occurs even as prices emerge back into recovery and should exhibit strong price growth into 2015, it noted.
In my view, another big reason for zero growth in Brisbane is income growth has been negligible, and other costs (especially food and entertainment) have increased faster than salaries.  As a result, rents in Brisbane have basically been flat for two to three years.

Saturday, November 1, 2014

No capital growth for Brisbane property over last six years

Most recent property investors in Brisbane are likely to have lost money.

From a recent report from RP Data:

"The next time you hear someone talk of the booming national housing market remember these statistics.  Yes combined capital city home values are rising and this is due to the influence of the Sydney and Melbourne housing markets where values are rising.  Real home values in Brisbane, Adelaide, Perth and Hobart are still lower than they were before the financial crisis and have seen no real growth in more than six years."



Saturday, August 2, 2014

Meriton Soleil Resales - Some up, some down

It is interesting to see how resales have gone for off-the-plan purchasers in Meriton's Soleil (501 Adelaide St, Brisbane).  Some original buyers have profited, and some have lost.  I am not convinced that the risk in buying off-the-plan, when you can't see the view or quality or feel of the apartment, is worth it, when it seems that there is a good chance that you can buy the same apartment when complete for less.

Apt 5304 - Sold off-the plan in June 2009 for $543,000, resold in June 2014 for the same price.  This is a loss, because of stamp duty and agent's selling fees.

Apt 2403 - Sold off-the plan in August 2012 for $493,725, resold in April 2014 for $525,000.

Apt 5505 - Sold off-the plan in August 2009 for $669,240, resold in April 2014 for $600,000.

Apt 5604 - Sold off-the plan in November 11 for $586,000, resold in April 2014 for $565,000.

Apt 4404 - Sold off-the plan in April 2012 for $485,000, resold in April 2014 for $572,000.

Apt 4004 - Sold off-the plan in March 2009 for $502,000, resold in March 2014 for $570,000.

Saturday, February 1, 2014

Low Growth Conditions for Property?

The Brisbane property market is somewhat uncertain at present.  There are fewer apartments on the market, with most property owners deciding to hold on to their property.  Low interest rates are good for investors.   Many of the apartments that are for sale have been for sale for a long time at an unrealistic price.  Price growth has not been magnificent in Brisbane.  And rent grown has been poor.  Currently, there is a higher vacancy rate for apartments (particularly furnished apartments).

The AFR on Thursday (30/01/14, p.3) states:

"Sydney and Melbourne house price growth is likely to slow to half the pace of last year, a leading property researcher says.  ...  But a weaker economic forecast, a lower Australian dollar, combined with rising unemployment and inflation are likely to keep a tight rein on further gains during the year."

But on the same day, Property Observer included the following:

While Melbourne and Sydney slow, Brisbane is tipped to bang.

“The Brisbane market is still in catch-up mode, but the Queensland economy is ramping up with regional centres recording growth. There will be an increase in job seekers in Queensland too, as they shift from Melbourne and Sydney where the jobless rate is higher,” Wilson says.  “Investors will be more interested in Brisbane real estate because of its potential for high yields and prospects of high capital growth.”

Wednesday, January 8, 2014

How long does it take for property to double in value?

There is a common saying that Australian property double in value every seven years.  RP Data's recent Pain-Gain report suggests that they doubling takes longer.  And this does not take into account stamp duty and real estate agent's fees.

"Of those homes sold throughout the September 2013 quarter, those held for a short period of time have been much more susceptible to loss. Despite home values having risen over the past year, 17.6% of owners who purchased and sold in the same year, sold at a loss. The greatest proportion of loss making sales has occurred across those homes re-sold after three to five years (20.2%). If an owner wishes to double their initial outlay upon re-sale they generally need to hold the home for at least a decade. 56.2% of homes re-sold between 10 and 15 years after purchase sold for double the purchase price and 94.0% of resales after 15 years were for more than double the initial purchase price."

Friday, December 27, 2013

Pain and Gain

RP Data has issued its December 2013 Pain and Gain report, comparing sales prices with the actual purchase price for the same property.  A summary:

"Over the third quarter of 2013 RP Data recorded 69,949 residential property re-sales nationally; of these 11.1% recorded a gross loss from the original purchase price. The gross value of the losses associated with these loss making re-sales totalled $488.1 million. Conversely, 88.9% of all September quarter re-sales recorded a gross profit relative to their original purchase price. The gross profit from these re-sales equated to $12.6 billion.

 Lifestyle regions continue to show the largest proportion of loss making re-sales, particularly within the unit markets as opposed to detached housing markets. Queensland’s Far North has overtaken the Gold Coast to record the largest proportion of loss making re-sales, with 33.9% of all September quarter re-sales transacting at a price lower than what the home was purchased for."

Thursday, August 15, 2013

Rental Increases

In Australia, rental yields for apartments are 4.9%, according to RP Data.

Tuesday, July 23, 2013

Population Growth

Population growth and employment drives house price growth.  Population decreases and unemployment causes property prices to fall.  The following statistics are relevant.




Friday, July 19, 2013

Brisbane Underperforms

Brisbane has been the worst performing city in Australia when it comes to capital gains for housing, looking over the last 5 years.  In fact, there have been, on average capital losses for the past 5 years.


Looking back 10 years, rather than 5 years, things look a little better.  But people who have purchased in Brisbane the last 6 years are doing badly today.


Sunday, February 24, 2013

The Past Year

RP Data reports that Brisbane property prices have increased at a rate of 2.3% over the past year.  This is not keeping up with inflation.


Wednesday, February 13, 2013

No Capital Growth for Brisbane Property


As reported by RP Data, on an average annual basis over the past 5 years, Brisbane has not had capital growth in property values.   Taking into account stamp duties and other transactional costs, the losses would be even greater.  It would have been better of investors, on average, to put money in the bank.