Sunday, October 5, 2014
Oversupply of Brisbane Units
At present, a higher than usual number of apartments are available for rent in Brisbane. Agents are reporting that it is taking a long time to rent apartments, and that rents are falling. For example, a very nice riverfront apartment was without a tenant for 4 weeks, and finally rented for $50 a week below the asking rent. Some owners are offering 4 weeks free rent. For third-tier apartments, the rents have dropped dramatically. The situation is not likely to improve any time soon.
When the foreign investors come to sell, they will not be able to sell to other foreigners. So the pool of potential buyers will be much smaller. This will cause significant price decreases for resales of apartments. Currently, many apartments that are not being sold by developers (i.e., not new apartments that have FIRB approval) are taking a long time to sell in Brisbane.
Some articles of note:
Bubble Deflating
Warning on Brisbane apartment boom
Not pretty
High-rise Oversupply?
Prices Down Due to Oversupply
Areas to Avoid
Yield Compression
Mixed Outlook
Prices Plunge
Saturday, September 6, 2014
Rental Pain
According to the article, Brisbane's inner north is by far the busiest precinct, with 1129 apartments predicted to settle in 2014 and a further 926 apartments next year. It is claimed that 41% of apartments sold int he inner north in the June quarter were one bedroom apartments.
In my view, one must be careful to generalise here. There may be many new apartments in certain areas, such as Bowen Hills, but few new apartments in other areas, such as downtown Brisbane or St Lucia. There may be too many small apartments, and not enough 3 bedroom apartments. So the oversupply may impact some and not others.
I would be careful buying in the Brisbane Showgrounds redevelopment area. Although reasonably close to the city and the RBH hospital, there is not much within walking distance. And there is a huge supply pipeline. This weekend, Lendlease will release The Yards, the next stage of this redevelopment. The development does not include any large parks, schools, kindergartens, supermarkets or the like.
Friday, August 1, 2014
Housing Price Supply and Demand
"Recent house price appreciation has been driven by more than simply a strongly growing population. Low interest rates have encouraged domestic investors to allocate assets into housing. Foreign investors have also been buying. A reduced rental return on housing would eventually discourage domestic investors but probably comes with a lag.
The apparent equalisation between an undersupply of housing versus strong demand for dwellings in major metropolitan areas comes as the official cash rate remains at a record low of 2.5%, and as the major banks lower their fixed rate home loans in an attempt to entire more people to borrow more."
This article applies more to the Sydney and Melbourne markets than Brisbane. It is important to look at individual markets, and not take southern trends and blindly apply them to Brisbane.
Sunday, December 16, 2012
The Long Decline in Australian House Values?
Whether the prediction is correct or not, I don't know. However, I believe that apartments are more suited to an ageing population than stand-alone houses. That is one reason I prefer apartments to houses.
Wednesday, September 19, 2012
Brisbane Apartments Prices to Fall
Yardney, the director of Metropole Property Investment Strategists, places the Brisbane unit market at two o'clock on the property clock – 12 o’clock indicates the property market has peaked while 3pm indicates the market is in a downswing.
Yardney expects there to be an oversupply of inner-CBD and near-CBD apartments in Brisbane for the next few years, causing prices to fall slightly.
Thursday, December 22, 2011
Housing Shortfall in Queensland?
The gap between demand and supply increased by 28,200 to 186,800 housing units this year, a National Housing Supply Council (NHSC) report reveals.
The annual report on the state of supply shows NSW and Queensland had the largest shortfalls of 73,700 and 61,900, respectively."
See Business Spectator
Saturday, August 27, 2011
Wall Street Journal Report on Australia Housing
Oversupply of Apartments in Brisbane, especially Hamilton and Albion
The June quarter report by real estate agent Place Advisory on inner Brisbane's apartment market says new developments planned for this precinct, which includes suburbs such as Bowen Hills through to Hamilton, threaten to create an oversupply in coming months.
Large multi-density communities are being approved almost on a weekly basis, while new mixed-use communities are poised to enter pre-release marketing campaigns before Christmas.
Place Advisory says that if many of these projects are not an overwhelming success, it will add to an already pessimistic local dynamic, ultimately driving away buyers from off-the-plan sales. The success or failure of only a few will affect the wider Brisbane property market in the longer term, it says.
Almost 70 per cent of the unconditional sales during the quarter were priced under $550,000. Only 6 per cent were above $750,000. Total sales were about $136 million, in line with the average total quarterly sales in the past five years.
There were 2144 new residential apartments for sale, or about 27 months' of stock, in inner Brisbane at the end of the financial year.
Of these, 50 per cent were two-bedroom, 33 per cent are one-bedroom apartments, and only 12 per cent three-bedroom configurations.
Place says most of the unconditional sales in the quarter were to interstate or international buyers.
Friday, March 4, 2011
56% over-valued!
"Australian house prices remain the most overvalued in the world, according to the latest quarterly ranking of global house prices by The Economist magazine.
Based on a historical gauge of home prices to rents between 1975-2010, the magazine estimates that Australian residences are 56 per cent over-valued, exceeding the 54 per cent over-priced rate in Hong Kong and 48 per cent in France.
"There may be good reasons for Australian prices to have risen so far, but people made similar, and ultimately incorrect, arguments for the run-up in prices in the West,"The Economist said in a statement accompanying the survey's release."
See SMH
Friday, February 27, 2009
Warning from NZ
``A lot of the apartments that have been bought off the plans say 18 months to two years ago are selling for $100,000 to $200,000 less than people paid for them because there's just an oversupply."