Low Demand for Prestige Homes

"The old belief that because of scarcity these properties would not fall much in this market, while more common housing stock would have bigger losses because of the amount available, has not proved correct. According to RP Data national research director Tim Lawless, this theory held true until recently when margin calls, devalued share portfolios, low company profits and lower than expected executive bonuses brought new conditions to the prestige sector. Now there is simply less discretionary income and lower demand for expensive homes.

"Demand has virtually come to a halt in some inner city areas," Lawless says.

RP Data has a stratified median house price index that divides each market into 10 layers, allowing analysis of different price segments.

In Brisbane, the most expensive tier fell 9 per cent and the least expensive fell 3 per cent.

Because no real improvement in business conditions is in sight, demand for prestige homes will remain relatively low, RP Data says"

Source: The Australian

Parklands at Sherwood Completes

Stage One at Pradella's Parkland at Sherwood is now complete. There appear to be some good buys, including a large one bedroom for less than $400,000. There are apartments for rent too. This looks like a great development.

No Sunshine for the Coast

"Among the states, hardest hit appears to be Queensland, where 4000 new apartments are going begging: 1000 on the Sunshine Coast, more than 700 in both Townsville and Cairns, and far more on the Gold Coast.

It is believed many of them have fallen into the hands of the financiers, given that most developers make just 20 per cent profit on a project."

The Australian

At least 4000 new apartments are still unsold in Queensland and most of them are believed to have fallen into the hands of their financiers.

Bankers are now asking what to do with the properties, and the problem has prompted property experts to run seminars on how to deal with hotel resorts and the unsold million-dollar beachfront apartments that many now control. Mortgagee sales remain prominent on the Gold Coast, where 1383 new high-rise apartments were for sale in the November quarter. Only 37 were sold in the three-month period.

That compares with 965 for sale in the November 2007 quarter, when there were 142 new high-rise apartments sold.

The Australian

Raptis Goes Bust

Gold Coast and Brisbane developer, Raptis, went into administration today. Also, the developer's $700 million Hilton Hotel redevelopment in Surfers Paradise was put into voluntary administration this week. See CM

Brisbane Rentals

It is rental season in Brisbane, and there is strong competition for apartments. Many people are delaying a buying decision, and so are renting. Some renters have locked in long term leases, taking these apartments off the market for some time. Some investors have put their apartments into a short term letting pool for nightly "hotel" rentals, taking these away from the permanent rental market.

Rents for decent unfurnished two bedroom apartments are as high as $600 per week. One bedroom apartments in decent complexes are very popular and hard to find. Add $100 a week for a furnished apartment.

If you are looking to rent, here are some ideas:

• Ciana Indooroopilly, 2 bedroom rents range from $475 to $600 per week
• Parklands Sherwood, 2 bedrooms from $440 per week; 3 bedrooms from $540 per week,
• Fresh Toowong, 2 bedrooms about $500 to $550 per week
• Admiralty Towers One, which has large apartments
• Arbour on Grey, from $550 per week for a 2 bedroom
• Metro 21, has both furnished and unfurnished, and is not doing short stay rentals so the building is more stable and homely.

Also, have a look at this prior post.

Lawsuit Against Council over Brisbane Apartment Rates

BRISBANE unit owners have launched a Supreme Court challenge against the validity of the Brisbane City Council's rating parity factor scheme.

The scheme was introduced by Lord Mayor Campbell Newman in the 2008-09 Brisbane City Council Budget and has been strongly opposed by unit owners, particularly in inner city areas.

Paul Cassels and Darryl Penfold, the president and vice-president of the Brisbane Association for Rates Equity (BARE), filed documents in the Supreme Court in which they seek a court order declaring the new rates scheme unlawful and invalid. The action has been brought by Mr Cassels and Mr Penfold on behalf of all BARE members, who are owners of lots in community titles schemes in Brisbane.

Outside court Mr Cassels said the Lord Mayor had tried to set the rest of Brisbane against unit owners by declaring they were millionaire "penthouse owners".

He said that wasn't true and the BARE was made up of average people who were opposed to rate hikes of up to 500 per cent. "The actions of the Lord Mayor have been disgusting," he said.

Mr Cassels said he hoped the Lord Mayor would reconsider his stand before the matter had to go to a court hearing. He predicted the issue would be a major factor in the next state elections.

Mr Cassels said the parity factor was a controversial rating mechanism that dramatically increased the general rates on thousands of units and townhouses throughout the city along with commercial and retail strata title property.

He said while the initial impact of the scheme would be felt most in inner city and near city areas, the exponential value formula on which the scheme was based meant that every year more and more units throughout Brisbane would be automatically "caught." BARE has already been instrumental in a substantial re-working of the scheme.

However, BARE has made it clear that it wants the scheme dropped and the rates cap on owner-occupied CTS property (also removed last year as part of the parity scheme) reinstated immediately.

Source: Courier Mail

despite the reported gloom

"After an eventful year’s end, it’s difficult to see where residential property is heading into the new annum. Media reports daily on the poor state of the economy and the likelihood that things will get worse before they get better, yet some signals are conflicting. There are plenty of locations and sectors that still lack stock and it appears that landlords are continuing to get historically high rents despite the reported gloom."

"For those wanting to bag a bargain perhaps the best prospects lie in some of those previously difficult to enter suburbs such as New Farm and Tenneriffe. Buyers over $700,000 have been thin on the ground and tenants are finding rentals a bit pricey, so it seems demand in these golden suburbs is becoming a little tarnished. Keep your ear to the ground and you just might bag a winner, but remember to keep things in perspective. Look for capital growth over a reasonable three to four year horizon. You’re unlikely to make your killing over the next 12 months."

"Of a related nature, good opportunities are also evident in the current market to purchase resale apartments in near new and recently completed buildings on the Gold Coast at prices which are at a significant discount on both the original sale price of the unit and also on the asking prices of similar new units. In some instances, the resale price of apartments appears to be below replacement cost of a similar new apartment."

Source HTW

Apartment Prices Dip

See Brisbane Times

Brisbane experienced a mixed December quarter, with house prices rising 3.3 per cent and units backtracking 3.5 per cent. Unit prices during 2008 dropped 6.5 per cent and house prices firmed 0.4 per cent.

More Rental Properties

"The number of available rental properties in Brisbane will increase this year as investors struggle to offload their real estate assets and become "reluctant landlords" instead, one expert predicts."

See Brisbane Times

Property Game

A new property price guessing game, which is fun to play:  www.propertyiq.com.au

Property Promoter's Opinion

"Depending where you live, property values in your state would have grown a few percent or dropped a few percent overall. Of course we all know that the value of certain properties fell much, much more than that, some by more than 20%. And some segments of the market, in particular the higher priced properties, holiday properties and rural properties, markedly dropped in value. "

See Property Update for full report.

Rentals In Brisbane

It is rental season in Brisbane, and there is strong competition for apartments.  Many people are delaying a buying decision, and so are renting.  Some renters have locked in long term leases, taking these apartments off the market for some time.  Some investors have put their apartments into a short term letting pool for nightly "hotel" rentals.

Rents for decent unfurnished two bedroom apartments are as high as $600 per week.  One bedroom apartments in decent complexes are very popular and hard to find.  Add $100 a week for a furnished apartment.

If you are looking to rent, here are some ideas:

• Ciana Indooroopilly, 2 bedroom rents range from $475 to $600 per week
• Parklands Sherwood, 2 bedrooms from $440 per week; 3 bedrooms from $540 per week,
• Fresh Toowong, 2 bedrooms about $500 to $550 per week
• Admiralty Towers One, which has large apartments
• Arbour on Grey, from $550 per week for a 2 bedroom
• Metro 21, has both furnished and unfurnished, and is not doing short stay rentals so the building is more stable and homely

SL8 Opinion part two

I drove past SL8 today in West End. I was not impressed. Although still under construction, to me it looks like a cheap motel from the 1950s. All the railings for the balconies are metal pipe rails. So from the front, it looks very uniform with railings going the complete width from left to right on every floor, without a break. From the back, it looks even worse. You may not realise, but the apartments don't have closed hallways. The door opens onto a hall that is outside -- and with the same rails going along the whole length. So you will be exposed to the the rain, heat and wind as soon as you open your door. The building looks to me like a larger version of the motel where Martin Luther King was assassinated when leaving his room.

Riparian Plaza Resales

"BRISBANE: Unit prices in an an exclusive city residential tower continue to soar in the face of economic crisis, and cashed-up investors are lining up for a piece of the action.

The Riparian Plaza in Eagle St houses three of the inner-city’s most expensive residential properties sold last year, and their values were up 27 per cent compared to similar properties sold at the same time in 2007."

See City News

Tennis Anyone?

Mirvac's Tennyson Reach project sold extremely well to start, but sales appear to have stalled. There are six apartment buildings planned for the site, at Tennyson in Brisbane on the same site as the Queensland Tennis Centre. Although more than 65,000 tennis spectators attended the recent tournament last week, no apartments were sold during the event.

The first two apartment buildings on the site, containing 115 apartments released in June 2007, sold out in three days. Prices ranged from $943,000 to $4.9M. These two buildings should be read for occupancy in the next 5 months.

The third building, currently for sale off the plan, has 92 apartments. Released in December 2007, 70 apartments still remain for sale. Originally marketed with a minimum price of $805,000, the minimum advertised price has now been reduced to $698,000.

According to the AFR, Mirvac plans to release building 4 at the end of 2009.

There are more than 10 resales listed on RealEstate.com.au. These include:

• 3 bed on 6th floor, listed at $1,820,000 (155sqm of internal living plus 15sqm of balcony)
• 3 bed on 5th floor, listed at $1,795,000 (174sqm of internal living plus 21sqm of balcony)
• 3 bed on 4th floor, listed at $1,395,000 (169sqm of internal living plus 21sqm of balcony)
• 3 bed on 2nd floor (so restricted river views I suspect), listed at $1,515,000 (162sqm of internal living plus 15sqm of balcony)

My guess is that these prices will drop, as a number of owners will not want to or can't settle, and rents for these apartments will be luck to be more than $800 a week.

New Top End Mooloolaba Apartment Building

Signature 87 by Juniper. Prices said to range from $5.98 million to $6.995 million. So the top end can't be too bad if Juniper releases this. Completion due late 2010. According to the AFR, David Kortlang from Juniper said investment in Mooloolaba and ocean front properties remainded strong. But the AFR said only 36 new units (from an inventory of 818 new units) sold on the Sunshine Coast in the six months to November 2008.

Building Height 11 levels (including retail)
Apartment Areas Typical Apartment 465 m²
- Internal 333 m²
- Terrace 132 m²
Number of units 10 (one per floor only)
Security Exclusive level access with private lift lobby on level, CCTV, proximity sensors, panic button and secure car park entry
echnology Full home automation including C-Bus lighting,
Kitchen Finishes Miele appliances, Professional gourmet kitchen with scullery (butlers’ kitchen), Home automation control centre
Lounge Room 50” concealable television
Bedrooms 4 Bedrooms, 42” concealable television in Master
Bathrooms 4 Bathrooms + powder room
Media Room 80” fixed television panel, Projector, Surround Sound, Touch screen control
Pool Private pool terrace with exclusive lap pool (per unit)

Top End Not So Top?

"Brisbane's prestige property market will 'languish' this year as former corporate high-flyers rein in their spending, according to experts."

"Holiday homes have also taken a hit, with PRDnationwide Maroochydore beach apartment specialist Alexander Veal saying the number of listed properties had increased by about 15 per cent in recent months."

See Brisbane Times

Brisbane Apartment Hotspots

"National Property Research managing director Matthew Gross said the area surrounding Sherwood in Brisbane's west will also be a future hot spot.

The combination of continued population growth and an undersupply of residential stock will lead to increased prices in the long-term, Mr Gross said.

Pradella's large-scale Parklands at Sherwood development is also likely to underpin growth, with stage one of the $150 million project nearing completion.

"As new, quality stock hits the market, it is anticipated the median rental figures for apartments in Sherwood will also grow significantly, providing investors with exciting purchasing opportunities," Mr Gross said.

See Brisbane Times

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

Vultures Turned Away

Re/Max Integrity principal Nerina Sportelli said: “We have buyers ringing up and asking about the sellers. Are they bankrupt? Do they need to sell? There is a perception among buyers that prices will fall, but I don’t think that will happen,’’ she said. Real Estate Institute of Queensland managing director Dan Molloy believes that median house prices have only “softened by a few per cent’’ since the bumper results of the September quarter.

http://city-north-news.whereilive.com.au/news/story/buyers-forced-to-dig-deep-to-secure-dream-homes/

Market Wrap

Market Wrap from Residex

"Saying we have passed the worst is a brave call in an environment where the world economy is in such a poor state. The risks that remain for us are that unemployment increases significantly and immigration is slowed as a consequence of government reacting to the higher level of unemployment. The balance to this is the lower interest rates which will reduce defaults while people continue to hold down a job."

"As a blanket rule you should stay out of the Gold Coast market, Western Australia and Brisbane units unless you are very well researched. These markets will be ripe for the picking late in 2009 when we should have passed their bottom but currently they look as if the risks are too high and the bargains will not yet be presenting sufficiently. Sellers will still be holding unrealistic expectations."

Reports 7.06% growth in Brisbane apartment prices in 2008, and 10% rent growth for same period. Sales volume drops from 16,000 to 12,370 Brisbane apartment sales (comparing 2007 and 2008 years).

Construction Costs

An interesting presentation regarding construction costs, including pipeline of developments, is located at:

www.mitbrand.com.au/

Prediction from RP Data

"2009 may also finally see the return of investors to the market. With 2008 seeing little to no value growth and rents continuing to rise, property investment is becoming more and more attractive with each passing month as yields improve and interest rates fall. Current market data shows that the cash rate is anticipated to fall below 3% by April 2009 and these much lower rates will translate into more and more properties representing positive cash flow opportunities. The significant falls on the share market witnessed during the last 12 months should also help to see investors return to the property market as they look to move away from the volatile share markets and return to bricks and mortar investment." Source, Property Pulse, 9 January 2009

Poms Moving to Oz

See article in The London Times.

SL8 Update

"With more than 90% of the 1, 2 & 3 bedroom apartments sold, limited opportunities remain to invest in SL8’s West End apartments. The two bedroom apartment final release is now selling from $565,000-$975,000."

Source: SL8 website

Hamilton Harbour Website

Devine has new content on its Hamilton Harbour website, www.hamiltonharbour.com.au

"1, 2 & 3 bedroom apartments $295,000 to $1.59M

• two commercial towers commanding the Kingsford Smith gateway
• two residential towers providing city and river views for many apartments and huge al fresco balconies for all
• an urban village in between, where residents and office occupants will mingle among boutiques, bars and restaurants they call their own

Beyond their own boundary, Hamilton Harbourites have easy strolling access to the dining, shopping, cinemas and City Cat terminal which already make this riverside enclave one of Brisbane's most attractive new places to live and work.

At the upstream end of Northshore, Brisbane's grandest and most ambitious ever urban renewal initiative, Hamilton Harbour is a landmark development which can place you at the centre of the city's astounding future growth. As a resident, tenant or investor, Hamilton Harbour demands your serious attention."

River City Apartments Fire

Queensland fire fighters say overhead sprinklers saved an inner-Brisbane apartment block from serious damage. More than 30 residents were evacuated from the River City apartment block around midday, after a fire started in a couch on a balcony of the 15th floor of the building.

Fire fighter Dave Sutch says overhead sprinklers helped contain the fire, but also caused some damage. "We have severe water damage on the 15th floor and it's leaking through to the 14th floor," he said. Residents were not allowed back into their apartments for more than two hours while fire crews secured the building.

ABC News

This building is being run by Oaks as a hotel, but I suspect that it does not have hotel standard fire safety standards.

Gold Coast Apartments in Trouble

"The unit market on the Gold Coast is investor driven. There s currently a good selection of high-rise units available for sale in Broadbeach, Southport, Coolangatta/Kirra and Surfers Paradise. A majority of the units currently available for sale include both developer stock and resale stock within new developments. A large proportion of the resale apartments are being offered for resale by distressed owners and hence have asking prices which reflect a reasonable discount on both their original sale price and also the price levels of the balance new apartment product in new unit projects. In this respect, it is very difficult to attract sales of new apartments given the more competitive pricing structure of the resale apartments. A large proportion of new apartment product on the Gold Coast is sold to interstate and to a lessor extent, overseas investors at price levels which are considered to be in excess of local market values. It will take some time for these stock levels of units to be absorbed especially given the current soft market conditions. Some purchasers, who bought ‘off the plan’ 12 to 24 months ago, are foregoing their deposits before settlement on new product rather than absorbing the loss in market value on settlement."

"It appears there will be more pain to come however for how long and to what extent is difficult to predict. The property market of 2007 is a distant memory with current market values being more reflective of values achieved in 2006."

Source HTW

Stockland Residential Outlook December 2008

Stockland reports that:

• The top end of the residential market is very soft.  Very fragile, and oversupply issues.
• First home owner segment stronger due to interest rate cuts and government grants
• Choice between owning and renting starting to favour owning, as rents are rising and interest rates are falling
• Investors returning to the market due to interest rate cuts, rising rents and poor stock market performance.   Investors make up 10% of Stockland buyers at present.

See Report (alternative site for Report) 

The Mill at Albion

The AFR reported that sales at FKP's The Mill project at Albion were strong, with 120 out of 132 apartments sold, at an average of $6500 a sqm.  For smallish apartments, where most of the two bedroom apartments don't have an external view from the second bedroom, and there is only a galley kitchen, and the overall aspect and views are poor, it seems that FKP has done well here.  I wonder how happy purchasers will be when this project is complete?

Stockland and FKP

"FKP intends to continue  discussions with Stockland, to ascertain whether a transaction in the best interests of FKP securityholders can be consummated."

See FKP Media Release from December 2008

Insignificant Price Decease in Brisbane for Apartments

See RP Data Rismark Indices released at the end of December.

Brisbane Apartment prices decreased by 1.25% for October quarter and deceased by 2.45% October 2008 year to date. Not a huge decrease.

"In 2009, Mr Lawless believes the affordable segments of the property market will offer the best opportunities for capital growth.

“This will be somewhat of a turnaround for the property market where over the last four years; it has been the affluent properties which have

generally provided the best capital growth.”

“Market activity is already showing signs of increasing at the lower end of the pricing scale,” he said."

See also Press Release

Gold Coast

From The Australian

"THE boom in beachfront real estate on the Gold Coast is well and truly over..."

Article About United States Housing Bubble

Extract:
"I'm ending my discussion of this issue in 2004, but throughout the years since, a number of analysts have emerged on both sides of the housing bubble question. So I do not claim to be comprehensive in my review. I just wanted to call attention to a few of the more prominent analyses that crossed my desk when the housing bubble first caught my attention.

There were many economists who did see it coming, but there were many others of equal or greater prominence and authority who repeatedly insisted that there was nothing to worry about. Under the circumstances, ordinary investors can hardly be faulted for taking actions that unwittingly fueled the bubble and are now having disastrous consequences for themselves and the nation."

Who Saw The Housing Bubble Coming?

Fortitude Valley

"On the unit front, Wooloowin, Annerley, Moorooka and Camp Hill all priced under $350,000, are tipped to give good returns next year. The surprise additions of inner-city Fortitude Valley and East Brisbane are also considered affordable areas for unit buyers.

"For people who are priced out of the city itself, these areas are a good option," Mr Kusher said.

"Fortitude Valley in particular has got a really good rental yield at the moment and stock there is quite varied. Overall, rental growth is starting to improve, so for those people who have perhaps lost money in shares, more investors will be attracted back to property."

See Brisbane Times