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%

Matusik Comments on Brisbane Property

From the Brisbane Times:

http://www.brisbanetimes.com.au/articles/2008/05/08/1210131140302.html

• While Mr Matusik predicts prices will not increase by more than eight per cent this year, he believes the key ingredients for continued growth remain strong.

• "Some commentators are claiming that the residential property market has come to a 'screaming halt', but there still remains some price growth."

• "In the short-term buyers are keeping their power dry following the interest rate rises over the last six months... but out recent survey work shows investors are starting to stir."

• With rents climbing at double-digit rates, Mr Matusik believes investors will return to the market during the course of the year.

• He predicts property prices in Brisbane will grow by 25 per cent in the next three years if interest rates remain steady and economic conditions improve.

Brisbane Trends

According to Australian Property Monitors:

"Decline of 2 per cent in apartment prices was observed in Brisbane, which may indicate softening investor demand."

“The party is definitely over for property investors, at least for now. Sydney, Brisbane and Canberra apartment markets have all experienced declines in value over the March quarter.”

Brisbane Apartments: March 08: $324,457; December 07: $331,302 March 07: $295,286

It is unclear to me from this report, actual what these figures measure. For example, if there are more forced sales of "Devine" investor apartments, by investors who overpaid and who are struggling with mortgage repayments, and other investors and owners are holding on to quality stock, will this impact the above statistics. Are these numbers really "like for like" comparisons.

Full report at: http://www.homepriceguide.com.au/media_release/APM_HousePriceSeries_MarchQ08.pdf

RP Data reports in its Property Pulse today:

"In Australia’s largest market, Sydney, houses and units are averaging between 44 and 49 days to sell. At the other end of the spectrum, Brisbane properties are averaging around a month to sell the average home."

"The RP Data/Rismark International end of month Property Value Indices Report now indicates that while the Australian property market has softened, it remains steady with national values increasing by 1.46 per cent over the three months to March ’08, an annualised return of around 6 per cent.

Despite interest rate rises and inflation fears, this is quite a good result and demonstrates the good risk/return characteristics of diversification in an Australian residential property portfolio.

When compared to the share market, this return seems all the more positive. As an example, during the March quarter the ASX200 and All Ordinaries dropped 15.5 per cent and 15.8 per cent respectively.

Based on the RP Data – Rismark findings, the only capital cities to record a fall in property values were Perth and Canberra where dwelling values declined by 1.0 per cent and 0.6 per cent respectively over the quarter. Despite the fall, Perth units hold the most expensive median value of any capital city at $464,000."

"Brisbane recorded growth of around 20 per cent with most regions delivering returns of 15-20 per cent over the year to March ’08. Inner city Brisbane stands out as the best performing region with growth of 35 per cent over the year."

"Another rise in interest rates will certainly cool the market further. The markets most affected will be the mortgage belts of Australia where mortgage stress is already at critical levels. A further rate rise could see property prices fall a further five percent in these locations. On the other hand, a constant interest rate environment would likely put a floor under many areas which have seen significant value falls. If rates remain stable over the next twelve month we would expect national dwelling values to remain in positive growth territory. "

Not so gloomy?

A recent Australian Financial Review article (16 April 2008) has the headline - "Gloom on house prices may be misplaced."

"In Australia, the long-term trend is very much the reverse [of the United States] - not enough housing stock to meet strong underlying demand for housing. This is the trend in both the home purchase and the home rental markets. In the short term, buyers are keeping their powder dry, following aggressive interest rate rises of the past six months. But this temporary stalling will do nothing to deflect the pent-up demand for Australian residential property that has been building over recent years - or the chronic under supply of housing stock that has developed since 2000. ... That said, there is a growing view that interest rates in Australia have now peaked. If this is right, the next leg up in residential property could come sooner than you think."

Market Comments

From the recent RP Data Property Pulse:

For those property owners who are considering selling, it would be a good idea to hold off if possible. There are a lot of properties listed for sale and fewer buyers in the market. Those buyers that are willing and able to purchase now have the luxury of time on their side, which means more negotiation, higher levels of discounting and longer selling times. Selling a property now is likely to result in a less than optimum sale price.

On the flip side, the time to buy may be ripe. We can expect the savvy investor to be on the prowl and owner occupiers who have their finances in order may also be stepping up to the plate. Times like these can be rich pickings for knowledgeable buyers who have the financial clout not to be deterred by further rate rises. These buyers will be making low offers and will be largely inflexible in their negotiations. The primary target will be properties that have been up for sale for more than two months or distressed sales.

Forced sales are likely to show a further increase during 2008. Those mortgage holders who have been holding out for a rate fall will be bitterly disappointed. Instead, they will be looking at steady or rising rates most likely into the next year. Many will be unable to withstand the sustained financial pressures.

Recent Sales Website

The Ray White - Chris Hinds website has recent apartment sales in Brisbane.

Examples:

Casino Towers, Apt 2301, 2 bed, 2 bath, 2 car = $660,000
Aurora, Apt 289, 2 bed, 1 bath, 1 car = $425,000

Also, building information.

RP Data Report

RP Data reports that Brisbane Apartment prices increased about 28% last year. Growth, however, is slowing.

See http://apr.cpmresearch.com.au/apr/Portals/0/MR290208.pdf

This valuer's report is also interesting.

St George Bank's Prediction regarding housing price growth

Despite the healthy state of the Australian economy, with positive terms of trade helping to boost incomes and household spending power, uncertain financial conditions may limit any benefits for property growth.

St George says that, on balance, it's unlikely that the residential housing market will remain unharmed.

"For this reason, despite fundamentals such as lower vacancy rates and higher population growth rates, we have downgraded our forecasts for average house prices," chief economist Steven Milch says in the latest property market update.

Australian house price growth is now expected to be between 5 and 10 per cent over the next year, with Perth the only possible exception - possibly below the 5 per cent mark.

"It should be noted, however, that a cooling in Melbourne, Brisbane and Adelaide (where prices increased by a minimum of 18 per cent over the past 12 months) might actually assist in avoiding a boom-bust cycle," Mr Milch says.

The bank says history shows the last five housing cycles lasted for an average of five years from base to peak.

"The trough of the current cycle was end-2004 so the possible timing of the next peak is end-2009," Mr Milch says.

See news.com.au

Brisbane Apartment Market is Hot

Extract from SMH (Full article) March 4, 2008

According to BIS Shrapnel forecasts, Brisbane is projected to show the best growth over the next three years and by 2010 will have the leading long-term growth average of Australia's capital cities.

While preferring not to elect individual suburbs as growth hot spots, BIS Shrapnel senior economist Jason Anderson says the imbalance between supply and demand in Brisbane is set to affect apartment prices. Anderson believes the capital will soon face a dire shortage of apartments, especially for renters.

"[The imbalance is] going to get even worse in the inner-ring suburbs ... so in that sense there's a leaning towards that end of the market - particularly if you're looking at the volume of demand, which will rise substantially as new office developments are completed in 2009 and 2010."

...

Most people buying an apartment within Brisbane aspire to purchase within the inner city or areas near the city, Lawless says. He believes these areas provide the highest level of amenity, such as shopping, restaurants, nightclubs and cafes.

Both Lawless and McNamara believe the city will offer good returns in the medium term. "Essentially, it's important to be close to the CBD - and where apartments overlook the river and are close to the city you'll probably have good capital growth," McNamara says.

"Brisbane is starting to become expensive and many Gen Ys are going to be looking to rent in quality apartments in the city where the action is, as opposed to buying, because property prices where they want to live are somewhat out of their reach."

...

SUNSHINE COAST

McNamara says Noosa Heads is "the signature place - the place to be on the Sunshine Coast" and believes that of all the areas in the region, this is the one where strong demand will continue.

Noosa's median apartment price rose from $500,000 in 2006 to $549,000 last year. McNamara also likes Mooloolaba, which has a thriving local economy and attracts many holiday-makers. Median prices rose from $355,000 in 2006 to $375,000 last year.