Will Hamilton Harbour Buyers Settle?

"Hamilton Harbour’s settlement rate should be on the development industry’s “must watch list”. Hamilton Harbour is a litmus test for the Brisbane apartment market – a beachhead, if you will."

All investors in Brisbane apartments should read this note by Matusik.

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."

Milton Park

Extracts from an FKP Press Release:

Brisbane City Council’s plan to turn the old Milton Tennis Centre site into parkland is set to benefit surrounding properties, with The Milton the only major new development now on the horizon, says a leading property researcher.

Michael Matusik, director of Matusik Property Insights, said council’s plans to resume the 3.5 hectare site for suburban parkland would reduce the future supply of new apartments in the suburb by about 670, increasing the ‘scarcity value’ of stock in Milton.

Mr Matusik said, along with the reduction in supply, homes and apartments in Milton would benefit from a three to five per cent price premium generally afforded to properties within a one kilometre radius of major parkland.

“The single most common feature of any metropolitan area’s position as a desirable residential address is trees, and while buyers want to be in close proximity to the city, public transport and amenities, they still want access to green open space.

Mr Matusik said the significant reduction in future supply as a result of the development of the parkland at the old Milton Tennis Centre site would put increased demand on new and existing property in the suburb.

The 30-level The Milton, which is anticipated to begin construction this year, will feature 298 one and two bedroom apartments, most with views of the CBD or Brisbane River, along with a ground floor retail promenade and commercial office space."

My comment: The proposed park is some time off. It is located on the other side of the railway and the other side of Milton Road to that of FKP's development. So I don't think it will have much impact to people's decision to decide to rent or buy on a development near the Milton Railway Station, that has views of the brewery.

When the Water Recedes....

Extract from Brisbane Times article:

The flagging Brisbane property market was not forecast to make substantial gains in 2011. Optimistic forecasts pinned rises at less than five per cent. Property analyst Michael Matusik said the flood was a "game-changer", one that would place a hold on normal market conditions, but only temporarily.

He said the properties completely inundated in low-lying suburbs away from the river, including Rocklea, Oxley and Archerfield, would see a substantial decline in value, but only if they were put on the market before being totally restored.

Meanwhile, the value of the 850-odd exclusive riverfront properties would remain largely unchanged, he said.

"This property is tightly held and most owners are likely to renovate and stay put. Values along the Brisbane River, I don't think are likely to change much," he said.

Still a target

RP Data analyst Cameron Kusher believes future buyers would be motivated by "lifestyle choices" in suburbs including Rosalie, Paddington, Milton, Chelmer and Graceville.

"Buyers will still aspire to buy in these suburbs," he said. "I believe many residents will decide to stay put and rebuild their lives. If people do decide to up and sell they will be in the minority."

Immediately after the 1974 flood many cashed-up investors bought distressed stock, renovated and sold for massive profits after construction of the dam began, Mr Matusik said.

"It does involve risk, but [a risky] investment often means high rewards," he said.

Bargain buying

Mr Matusik said dwellings partially flooded last week, which were put on the market at a 15 to 20 per cent discount from 2010 prices, made for a wise buy.

"For fully flooded homes, discounts over 30 per cent would be worth looking at. This assumes that improvements are actually made, via physical barriers and improvement management systems to help alleviate future flooding."

Mr Molloy warned the financial sector's value of flood-damaged properties was yet to be determined.

However, Mr Matusik said he suspected interest rates would fall by 25 basis points in the coming months, "correcting the unnecessary hike last November".

Rental woes

The rental outlook for tenants and recently displaced flood victims is bleak. Up to 10,000 flood-damaged households are estimated to be looking for temporary accommodation. This combined with the annual influx of university students hunting for rental accommodation will surely push up rents.

"Those investors without landlord insurance might elect to sell their properties, which presents an opportunity for those willing to take a risk.

"A mass investor sell-off, however, could have a marked negative impact on values across the city, making [predicted rent rises] of five to eight per cent very bullish."

Sales to sink

The volume of sales is expected to decline, contrary to last year's predictions.

"The overly negative commentary about the flood's impact on property across the region is likely to batter confidence, which in turn could see inquiry and sales decline further," Mr Matusik said.

Yet Mr Molloy said buyers on the ground were expected to be forgiving.

"The outpouring of community spirit has restored a social confidence in our suburbs. People will remember that for many, many years to come," he said.

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

Flats Are Flat

There are head-winds for investors in the Brisbane apartment market:

• slowing population growth
• foreign investors selling, because they profit from the high Aussie dollar
• foreign investors not buying due to the high Aussie dollar
• less foreign students, so less renters
• higher interest rates

Recent articles set out some of these concerns....

"QIC chief executive Doug McTaggart has painted a grim picture of the residential market in South East Queensland. ... "Population growth in Queensland is suffering." ... Herron Todd White estimated there had been a 30 per cent drop in volumes from 2008. ... vacancy rates are trending up at the moment ... the current Brisbane market is showing some oversupply... " Australian Financial Review, 4 November 2010, page 60

"Overseas students and retirees are fuelling population growth in Brisbane's inner city, with nearly 13,000 people now calling the CBD home. While Brisbane's fastest-growing suburbs are in the city's east and south, the growth of inner-city living is the perhaps the most visible change.

"A lot of the accommodation now is just built for students and they have just small kitchens," Ms McLean said. She said five of the unit buildings in Brisbane's CBD were mostly student accommodation.

"Some of them where the students are living are turning into ghettos," Ms McLean said.

"Down Albert Street, Mary Street, at the Parklands (apartments) there at Roma Street," she said.

Source: CBD bulges as more move in

Units in Brisbane are among the cheapest in the country as property prices in the city continue to slide, according to analysts.

The Australian Property Monitors September House Price Report, released today, shows the median unit price in Brisbane fell 2.8 per cent from $366,533 to $356,352 in the last quarter.

Source: Brisbane unit prices on the slide

Brisbane's property market woes look set to continue for the forseeable future due a slump in migration and an oversupply in the market.

Analysts have tipped prices to remain stagnant or dip further at least until the middle of next year. ...

Property analyst Michael Matusik has long refuted claims of an undersupply in the owner-occupier and rental markets.

"Queensland's population growth is slowing - and significantly," he said. The state's net migration in 2008 was 84,275 people, with 21,228 arriving from interstate.

At the end of March this year, net migration fell to 55,845, with just 11,012 people coming from interstate.

"Our preliminary estimates suggest that more people are leaving Queensland now than arriving from interstate [due to the state economic downturn]," Mr Matusik said. Of the rental market he said: "The amount of vacant stock available is not only greater than most realise, but it is getting larger."

Mr Matusik said about 13,500 new rental properties were required to house 35,000 new residents to Queensland last year.

"Yet, 33,000 new rental digs became available - or over twice as many as was needed," he said. "This is not how I would define 'undersupply'."

Source: Property price slump

Opinions Regarding Brisbane Property

Here is a good set of articles from Michael Matusik, regarding Brisbane property:

Opinions

Good Advice from Matusik

This is from Matusik's email this week. It is worth subscribing to his newsletter

Matusik Missive – A new paradigm?

20^th October 2010

The numbers of housing loans and new housing starts continue to slide. Every excuse under the sun is offered up as to why. The real reason, being an actual lack of demand, is rarely mentioned. But in short, buyers across the board are not that interested in buying residential property at present. This is especially the case for new stock.

Why?

Let’s cover the new supply first. This follows on nicely from the most frequent reply to our three-part urban myths missive series last month, which posed the question as to why a proper study into “what the market really wants” isn’t done. Well, we have done several; for the PCA for their Australia on the Move publication and for several clients including the Brisbane City Council.

In short, the current new supply is wrong. It is either too small, of limited quality and/or overpriced. What’s on offer too often does not offer value for money. Hence buyers increasingly opt for something established, which they might renovate or refurbish in the future, rather than buy a new dwelling.

In an ideal world, many would buy something alternate to the detached house, but only at prices much cheaper than new apartments, townhouses and the like are currently asking. In general, the market expects “other” housing to be about 20% cheaper than a detached house in the same area. Whilst they expect some shrinkage in the size of alternate accommodation, the current offerings are considered by most to be way too small.

Another complaint is that the quality of the new product – and in particular for apartments – is far too low for the prices expected. The thirst for a quality product is an opportunity and one which should grow in demand as baby boomers enter retirement.

The cheap and cheerful (often of late more “nasty” than “cheerful”) trend has gone too far. It is somewhat ironic that the housing industry is vamping up the supply of really tight product just as the emerging demographics suggest the opposite. Household sizes are increasing across Australia – fuelled by a baby boom, relatively high overseas migration and adult children remaining (out of choice) at home with their parents.

When it comes to existing product, many vendors, in short, want too much for the property. There is a flood of second hand stock on the market; the customary spring market pick-up is missing this year (although its impact is usually overstated) and with the threat of a further interest rate rise pending, vendors need to get realistic quickly or take their property off the market. Failure to do so could result in substantially lower offers (than a realistic price today) in the near future.

This issue was brought home quite clearly when a 293 square metre penthouse on the Brisbane River in Kangaroo Point (with uninterrupted views of the Brisbane CBD) was passed in at auction a few weeks back. The reserve was set between $1.2 and $1.4 million which equates to a paltry $4,600 per square metre.

Ironically, it is a buyer’s market and could be for some time to come – read “years” not “months” – yet potential purchasers are not buying. Usually and somewhat ironically, rising interest rates get interested parties off the fence. Maybe that will occur once the RBA actually moves the cash rate, but maybe not.

I cannot help but feel that we have entered a different paradigm – one in which a dwelling is a home, rather than a vehicle for speculation. If that happens, the term “real” estate will regain its true meaning.

To revisit our Aussie Urban Myths commentary visit newgeography.com

Investment Apartment

“Four out of five investors reside in a detached home, yet just half buy a detached house as an investment. Investors seem to like apartments, not to live in as such but as an investment, with just 12 per cent living in an apartment but over a third of them holding an investment apartment."

Source

Off-the-plan disappointments?

A story from The Australian:

• Investment properties to flood market
• Prices set to soften
• Short-term gains unlikely

"PROPERTY investors are targeting off-the-plan apartments hoping for short-term capital gain, with thousands of prospective pre-sale buyers eyeing Sydney projects.

Ray White is reporting a 6 per cent lift in investor buying as shares weaken and with the end last year of the boosted first-home buyer's grant, The Australian reported.

But analyst Michael Matusik predicts investment properties will flood the market in the near term, leading prices to soften.

An Australian Housing and Urban Research Institute report this month said 80 per cent of investors buy for long-term gain, but at least half sell within five years because of cashflow problems or disappointing capital growth. One in four investors sells within 12 months.

Developers in Sydney are reporting strong demand for new residential projects following stamp duty concession by the NSW government this year. ...

Mr Matusik said property prices would not crash, but there would be deflation in values over time.
"In the next decade, we might see very little growth, and if investors keep buying and thinking 'I'm going to make a killing and then move on', they're going to find themselves a little disappointed," he said.

This would be mostly the case in Melbourne, where the market had been strong, he said. In Perth, Brisbane and Adelaide, the trend had already started to occur.

The Australian

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

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.

Source: The Australian

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

Rents and Medium Prices - Comment from Matusik

"Despite rents rising by 14% - according to the official figures (during 2008) - 70% of renters that year did not pay more rent and 60% of renters have never paid any more rent from the day they moved into the accommodation. Beware of any rent or even end price analysis based around median results. All that shows is what type of property sold or rented rather than a change in actual values. Resales analysis and lease renewals are the only way to truly understand what is happening in the residential market."

Source: matusik.com.au

Matusik Turns Bear!

RELIEVED property sector experts are optimistic about future growth for the industry after residential values seem to have dodged a bullet in the fallout of the global financial crisis.

Experts across the country are predicting capital increases of about 5 per cent. Some are warning of problems associated with an undersupply of property.

But Brisbane-based property researcher Michael Matusik has gone against popular opinion to suggest that developers should be cautious. "I have been banging on about an undersupply for close to 10 years, but circumstances have changed in the past six months to suggest that maybe we are, firstly, already building enough dwellings to cater for demand, and that we might even be heading for an overbuild if current trends continue," Mr Matusik said.

He said increased foreign migration hadn't resulted in as big as demand as expected due in part to large household arrangements.

RPData researcher Cameron Kusher is more bullish than many commentators and predicts 7 to 8 per cent growth in Brisbane next year. He cited availability of finance as the wildcard that could affect how many investors get into the market. He predicted many would look at older stock that needed renovating.

Source: Courier Mail

Scared buyers put apartments on top

Will units continue to be a more affordable option? Not unless it becomes easier to build them. Analyst Michael Matusik says multi-unit building approvals fell 44 per cent in May and, while the data is volatile, medium-density dwelling starts are on "a serious slide south". This is despite lower interest rates, the economic stimulus and rising investor interest.

Matusik says high prices and restrictive buyer and developer finance are the limiting factors. A new apartment in a downtown city area (Matusik lives in Queensland) costs the buyer at least $8000 a square metre, putting the cost of a 69sqm two-bedroom apartment with one parking space at $550,000.

Investors buy close to 75 per cent of all new apartments, but they now need bigger deposits to do so. Twenty per cent is often the minimum and sometimes 25per cent to 30 per cent.

Growth in rents is also slowing and Matusik says he can't see investors rushing back into the new apartment market. He says most new units sold recently have been substantially discounted, often below replacement cost.

Some are also not that new in the sense they have been on the market for a long time.

Second and third-tier financiers are out of the market, so there has been a dramatic reduction in the amount of development finance available.

"Just 12 months ago, banks would lend on an LVR (loan to valuation ratio) of 80 per cent. Today they are asking 60 (per cent) to 70 per cent," Matusik says. Deposits must be in cash and developers are often asked to provide a profile on each buyer. "Even cashed-up quality developers can't make most of their new projects work under these conditions, and God help you if you need to roll over funds."

Matusik says there are no quick fixes and new apartment construction will be "sluggish at best" for the foreseeable future and even "dead in the water" unless the banks free up finance for such projects. The effect on supply and affordability should be obvious a few years down the track.

The Australian

Matusik comment

Matusik comment

29 April 2009

"First home buyers continue to drive the property market, for the time being at least, while tenants wait for the investors to return and increase supply. We wrote earlier this year about a potential first-home buyers’ bubble.... There is now little doubt that such a bubble exists. Brokers, banks, valuers and agents cannot keep up with demand. ...prices for stock under $500,000 have risen by over 10% (and often more) since the introduction of the boost late last year. Assuming the boost is canned come budget time, we believe that there will be a short-term negative impact on the market, but one that will only really be a bump in the road. The reality is that low interest rates and rising rents will continue to make first home buyers want to enter the market and this, combined with high rental yields, will eventually entice investors back. This is supported by a record low vacancy rates in rental properties. If the boost is extended, we should see investors come back to the market quickly as they cannot afford to sit on their hands and watch the market move away from them. This will promote strong competition in the market place and drive values as we make our way through 2009."

Gold Coast Price Collapse

"Matusik Property Insights analyst Michael Matusik says the most dramatic price falls are in Gold Coast suburbs where premium and tourism-dependent holiday units are in oversupply. "Developers that have sold 60 to 80 per cent of the development are now looking for a profit or to break even so they quit the project and advertise apartments that were $1.1 million for $900,000," he says."

"L J Hooker's Surfers Paradise principal, John Newland, says apartments that sold for $1.4 million last year are being marketed for quick sales with asking prices about $800,000. He also reports a two-bedroom apartment with ocean views that sold last year for $580,000 is now listed for resale at $449,000. And another listed at $530,000 has been discounted to $439,000. Surfers International principal Malcolm Catchpole says an apartment that sold last year for $555,000 and rented at $560 a week is now on the market for $359,000."

For Full Story, See Domain

Shoe Box Apartments

"Property analyst Michael Matusik believes there is a large segment of the real-estate market who would prefer to live in a compact unit of 50 square metres or less."

See Brisbane Times

Predictions and Guesses

A lot of people seem to think that it is the end of the world as far as property investment is concerned. These are my thoughts.

Facts:

• Interest rates are going down
• There is low unemployment in Queensland
  
• There are few vacant rental properties, and rents are still increasing in Brisbane
  
• According to REIQ and RP Data, medium prices have fallen less than 3% in the past 6 months, and over the past year prices have still increased
  
• Property is still selling. For example, a three bedroom apartment is Admiralty One sold in less than a week. At auctions in Mooloolaba this weekend, which has been a tough market, there were 2 two bedroom apartments that had bids of more than $1 million: Oceans 503 had a highest bid of $1,200,000; and Sirocco 604 had a highest bid of $1M.
• Banks are still lending money, but they have tighter lending requirements
• For most of Brisbane, there are very few delinquencies.
  
• In outlying areas (such as Forest Lakes and Springfield) and low quality bulk highrise marketed to investors (e.g., Charlotte Towers, and other recent Devine buildings), there are distressed sellers who are selling for less than they paid.
  

Assumptions:

• Matusik, who is a very bullish property consultant, has the following assumptions in most of his presentations, but I am not sure how many of them will turn out to be correct (and some from his September 2008 presentation are already wrong):
• interest rates to drop by 0.5% in fiscal 2009
• $A remains high – above 85 US cents
• migration to oz remains high US economy has a mild recession, mild recovery in 2009
• demand for our resources continues
• share market settles down unemployment remains below 5% and wages growth remains constrained

Opinion and Predictions (Guesses?)

• Property in inner Brisbane will take longer to sell than over the past 3 years (e.g., time on market will return to a more normal period of time, from 15 days to 30 or 40 days).
• Prices for poor quality apartments will fall by 25%
• Prices for apartments that have their views destroyed (e.g., Charlotte Towers, 212 Margaret, River City, and some in South Brisbane) will fall by 25%
• Prices for apartments without carparks will fall
• Some new apartments for off-the-plan developments) are priced too high for what they are, and will have difficulties selling in the short term (e.g. Waters Edge, Empire Square, Vision)
• Anything priced over $6,000 per sqm will struggle to sell, unless it is really special
• Off the plan developments will not sell well until completion -- in uncertain times, people do not want to make bets on the future, especially where the product being sold is intangible -- people want to touch and feel in uncertain times.
  
• Really good stuff will sell, and will not reduce in price by more than 5% (if at all)
• In February 2009, the market will pick up, but will not have growth of more than 10% per year for at least two years
• Due to lack of building today, things will get better for investors in good locations in the short term
• This year, my property portfolio looks better than may stock portfolio.

Matusik on Brisbane Apartments

Recent Matusik reprt on Brisbane apartments is here. Basically, it says that there are not enough apartments in inner Brisbane.