Kurv in Newstead

A proposed new development in Newstead, called Kurv.  It is located at 31 Longland Street, Newstead.

• Ground floor restaurant and offices.
• Five levels of 55 apartments
• 25 – studio apartments
• 30 – two bedroom apartments

Macrossan Residences Sale

I bet well-known Brisbane solicitor and Labor Party identity Con Sciacca is not happy.  He purchased an apartment off-the-plan in 2008 in Macrossan Apartments for $1,835,000.  The developer went bankrupt, and the remaining apartments have been bought by an investor, who is listing them for resale at "Almost $1 million below what they cost."
"Were Selling for up to $3M, Now Priced from $1.395M to $1.575M"

(I suspect that the real estate agent is exaggerating slightly - I doubt that the same apartment that Con purchased would sell for less than $1M.  So the million dollar discount is a bit of a stretch.  Video here.)

These discounts make it hard for an original buyer to resell without making a huge loss.

In any event, even these discounted prices are high for a 3 bedroom apartment that is not riverfront and that is sandwiched by Skyline and Soleil.

Readjustment of contribution schedule lot entitlements

"Much of the animosity between the applicant and the body corporate committee has arisen following his submission to the committee of a motion to reverse contribution lot entitlements to the “pre-adjustment level”. Based on advice that it had obtained from MBA Legal, the committee declined to lodge a new community management statement reflecting “pre adjustment lot entitlements”. As a result, the applicant issued a number of circulars to other lot owners regarding his request for a reversion of lot entitlements.

Within bodies corporate, few issues have been more polarising than the adjustment and/ or readjustment of contribution schedule lot entitlements (CSLE’s) which set the proportion each owner contributes to body corporate expenses. The Body Corporate and Community Management Act 1997 previously provided that in certain circumstances, an owner could apply to the District Court or a specialist adjudicator for an order to have the original entitlements adjusted. Where such an order was made, levies payable by some owners decreased while others increased.

In November 2010 the Minister for Tourism and Fair Trading introduced into parliament a bill to amend the Body Corporate and Community Management Act 1997. This bill was passed by parliament in early 2011 and changed the criteria for adjustment of contribution lot entitlements. These amendments also include a procedure for certain owners to seek a reversal of previous adjustment orders. Except in limited circumstances, such as where the adjustment order merely formalized an agreement made by the parties, or there has been a material change such as further subdivision, the body corporate is obliged by the legislation to lodge a new community management statement reflecting the original lot entitlements. Where such action is taken, levies payable by some owners decrease while others increase.

Given that all lot owners are members of the body corporate, it is important that they have an opportunity to air any grievances and have input into the management of the scheme. Owners often have opposing views on various matters, but in my view robust discussion and debate is an important part of body corporate decision-making. This requires that, within reason, all owners feel free to express their point of view without unreasonable threats of defamation proceedings."

See Q1 Decision

Another Big Loss For Off-The-Plan Buyer

Many buyers in Niecon's The Oracle development at Broadbeach purchased off the plan and failed to settle.  A recent court decision shows the losses that an off-the-plan buyer may suffer if the buyer does not settle.

Purchase price for apartment 601 - $1,010,000
Plus holding costs & interest from settlement until court judgment - $196,631
Less estimated net proceeds if sold today - $700,000
Plus agents fees to sell - $29,645
Plus legal fees to sell - $2,200
Less Deposit - $101,000
Total owed = $437,476, plus interest at 12% until this is paid, plus legal costs of the lawsuit.


So this buyer lost a total of at least $538,476, which is more than 50% of the contract price for the apartment, and didn't get the apartment.  Note that the valuation of the apartment dropped 30%.  Take care when buying off the plan.  (And read this book first!)

Brisbane Not Yet At Bottom

For Apartments:

The Brisbane apartment market fared worse than the house market in the last six months of 2011 and faces an oversupply of this type of property.  REIQ figures for the December quarter 2011 show that rental vacancies in inner Brisbane – where most of the stock is apartments – increased from 1.4% in the September 2011 quarter to 1.9% in the December 2011 quarter while the overall city vacancy rate remained unchanged at 2.3%  

In addition, valuation firm LandMark White is warning that a combination of too many projects and historically low demand could result in an oversupply of new apartments in inner-city Brisbane suburbs like Fortitude Valley and Bowen Hills.

The firm’s property valuers believe affordable “entry-level” apartments within five kilometres of the CBD will continue to appreciate in value but expect values in prestige units in new complexes to continue to fall.

“We have seen demand for prestige units decline again, with extended marketing periods or heavy price reductions,” says WBP.

On the other hand, “entry-level units are being purchased by single professionals who require affordable housing and access to the Brisbane CBD. We have recently seen volumes of sub-$400,000 unit sales increase.”

Michael Yardney is very bearish about Brisbane units, placing the market in the relatively early stages of a property downturn at three o’clock.

“There are a large number of off-the-plan apartments available in the Brisbane CBD and surrounding suburbs. Many of these remain unsold, and this oversupply of properties will put downward pressure on prices and rentals,” he says.  “Many of the apartments that have been sold off the plan are coming on stream in the next few years and have been purchased by investors.  Some will have difficulty getting finance and settling their purchase. Others will be disappointed to see the end value of their properties is less than their purchase price,” Yardney says.

“There will be an oversupply of inner-CBD and near-CBD apartments in Brisbane for a few years, causing prices to fall slightly.”

See Report Here

For houses:

As the house price growth figures from RP Data show, Brisbane’s housing market continues to fall.

House prices were flat over the final quarter of 2011, according to figures compiled the Real Estate Institute of Queensland, which says that one year on from the floods, the housing market is showing signs of stabilising.

Michael Yardney, Louis Christopher and Charles Tarbey all believe Brisbane has some way to go before it bottoms out.

“House prices in Brisbane have dropped for the last two years. Brisbane buyers are lacking confidence to re-enter the market and are sitting on the sidelines waiting for signs that the market has bottomed before they make a purchase,” says Yardney.  “This may occur later this year as Brisbane prices stabilise. Prices are unlikely to start rising until the second half of this year or 2013.”

See Report Here

ANZ lift interest rates, after 5pm on Friday

In a bad sign for property owners, ANZ has announced it will lift rates by 0.06%.  Effective 20 April 2012, ANZ’s new standard variable mortgage rate will be 7.42%pa.

If you are a customer, probably a good idea to leave ANZ.

Malaysians Big Buyers of Brisbane property

See Courier Mail story.  Property developer are pushing sales in Asia.

Midwood Report - Brisbane OK

"The outlook for the new Brisbane apartments market remains healthy with supply and demand evenly matched, but the Gold Coast market continues to struggle with sales of new apartments still at post-GFC lows, according to the latest Midwood Report.

Unconditional sales of new Brisbane units increased from 74 in the November quarter 2011 to 186 in the February 2012 quarter. Stock levels have declined to 1,446 from a peak of 1,683 in May last year, which equates to two-and-a-half years’ worth of supply at current sales rates.

Investors have been spurred on by rising rental returns, with one-bedroom inner-Brisbane flats registering rental growth over the past 12 months of 9% to a median of $300 per week, with a smaller 4% increase in two-bedroom flats ($380).

The strongest-selling project was David Devine’s Metro Property Madison Heights development in Bowen Hills, which clocked up 57 sales with prices ranging from $350,000 for a one-bedroom apartment to $434,000 to $556,000 for a two-bedroom apartment. Madison Heights features 296 apartments, with 200 sold since launch of the project in March 2011. There were also 15 sales at Metro Property’s The Chelsea development also in Bowen Hills, with 190 out of 195 apartments now sold in the project. Prices range from $355,000 for a one-bedroom apartment to $546,000 for a two-bedroom apartment, and there were 20 sales recorded for Brooklyn on Brookes in Fortitude Valley, Metro’s joint development with Indian-based developer Pearls. The other strong performer was Meriton’s 81-storey Infinity Tower, currently under construction, with 34 sales recorded and prices ranging from $470,000 for a one-bedroom apartment to $650,000 for a two-bedroom unit. To date 123 out of the 287 apartments in the tower have been sold."

Full article here at Property Observer.

Domain or RealEstate.Com.Au ?

When looking for a property to buy or rent, it is worth looking at both Domain and REA.  Note that for REA, advertisements can only be placed by real estate agents.  If an individual landlord or seller wishes to advertise, then only Domain will accept the advertisement.  Accordingly, Domain will have different (and possibly more) listings than REA, and often at a better price or rent (because agents fees are not being paid.)

Roma Street Parklands - Recent Sales

Here are some recent sales of apartments in the Roma St Parklands complex in Brisbane, which was developed by Pradella in around 2002 to 2006:

• Apt 3006, 3 bed, $520,000
• Apt 3093, 1 bed, $360,000 
• Apt 3107, 1 bed, $370,000
• Apt 7046, 2 bed, $621,000
• Apt 6039, 3 bed, $1,475,000
• Apt 3081, 3 bed, $590,000
• Apt 6028, 3 bed, $1,300,000
• Apt 3120, 2 bed, $637,000

What is interesting here is that of the eight resales listed above, only 1 was less than the purchase price that the seller originally paid.  Also, at least 5 were sales to owner occupiers, and one was a sale to a super fund.  All apartments seem to have Parklands views.

RP Data March 2012 Report

From an RP Data press release:
    Australia's housing market is showing signs of stabilising after home values rose 0.2 per cent in March. Not only has the market remained unchanged for the quarter ending 31 March 2012, it is also level with the 31 November 2011 home values across the combined capital cities. The flat result over the quarter is the strongest result since March 2011 when values increased by 0.7 per cent.
    According to the managing director of Rismark International, Ben Skilbeck, “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in calendar year 2011. This month it was the resource rich states which delivered the strongest gains with Perth, Darwin and Brisbane up 1.4 per cent, 1.1 per cent and 0.8 per cent respectively”.
    Other market metrics are also showing some improvement. “The number of properties available for sale is continuing to moderate from the historic highs which peaked late last year and auction clearance rates have been holding above 50 per cent for most of 2012,” Mr Lawless said.
    See:  RP Data Press Release .  See also Property Observer. 
    Brisbane apartment prices are up 0.7% for the month, but down 2.3% year on year.

Decision Making Tips

When buying or selling an apartment, it often gets down to a negotiation on price, with the agent repeatedly ringing buyer and seller, trying to get an increase in the offer or decrease in price. It is not uncommon for the agent to bully, flatter and confuse both parties to get a deal done.  Research shows that in such circumstances, a person may get decision fatigue, and make a bad decision.  My practice is not to make a buying or selling decision after lunch, but to sleep on it, and decide in the morning, without influence from the agent.

The more decisions you make, the worse they get to a marked degree -- you are more likely to make crucial mistakes or, put off a decision and miss an opportunity. One solution is an unbending set of investing rules, which minimise the need to make decisions.  Making fewer decisions improves willpower so much that it should have a major effect on investing performance.

For the same reason, decisions made earlier in the day are much better than those made later.  Rather than implying that you should hurry decisions, however, this indicates that in investing, you should get better results from a systematic process of studying an investment until you have enough evidence, then actually making the decision the next morning. The "sleep on it" principle.

In today's market, there should be no rush for a buyer to close a deal.
See article in NY Times Magazine.

Apartment Sun

When buying or renting an apartment in Queensland, it is a good idea to understand which way the apartment faces, and to view the apartment in the morning and afternoon.  The sun will shine in, and with the trend for large windows, this makes the apartment bright but potentially hot.  Below are some photos of apartments at the Roma Street Parklands (Pradella's development), including the expensive Pinnacle building.  Notice that the blinds are drawn in the penthouse apartments.  Even though these apartments have a great view, and do not face west, that is not much use if the blinds are always closed.

Surfers Paradise

I visited Surfers Paradise this weekend to look at the Hilton and Soul apartment buildings.  The local area was no paradise.  The beach was great, but the built environment was horrid.  Closed or run down shops.  Poor quality shopping.  Fast food restaurants.  Topless bars.  Bad street-cape.  Not a nice place to visit with the family or for a romantic vacation.  No wonder prices have fallen, and according to Matusik, they still have a way to go to reach bottom.  Hilton tower illustrated above.

Kickstart coming, or not?

Comment from a reader on a prior post and newspaper story from this week:

Referring to the extract from the AFR: Qld Property Due for Kick Start:

One contributor to that article states in para 4: Quote:  “Because of the huge influx from the resources companies in the office towers, I think what is going to happen within six months is people will have to pay three months’ to six months’ rent in advance to secure an apartment,” Woodley says. “There really aren’t many being built.” Unquote.

According to and as reported in Australian Property Investor Magazine, January 2012 issue, (page 109) there were 5,957 units on the market for sale in Brisbane as of October 2011, not Queensland, BRISBANE!   

Repeat Quote: “There really aren’t many being built.” Unquote.  I find that statement very puzzling.  In excess of one thousand apartments are in current construction in some form around the Brisbane CBD 2km circle.

Resource workers all already have a home or somewhere to live and if have families, have an existing home, rented or under mortgage or owned outright.  They all know the story of their friends who invested their hard earned cash into Gold Coast Units and lost and the resource unions are already warning  their members about a repeat of this scenario of the 90’s fore-seeing harder times to come in that industry as China winds back just as the Japanese did in the early 90’s despite the upbeat talk about the mining “boom”.  And the contributor has also over-looked this: Resource workers are all on “contract labour” employed by labour hire companies, not the mining companies themselves. They have no full time job and are employed essentially by the hour only. They can be and are, dismissed with no notice or reason.  The banks will not lend to people in this employment situation.   They are not bankable in this economy.

Another Victory For the Dog

Body Corporate for River City Apartments CTS 31622 v McGarvey [2012] QCATA 47 (12 March 2012)

"The relevant context, in my opinion, is simply that there may be a number of types of scheme, in which owners and occupiers may have a number of different objectives and uses for their lots, and the very nature of any community titles scheme requires that relationships between owners and occupiers must be regulated in some discernible fashion, and by reference to reasonable criteria unless otherwise specifically provided.

So where does this leave a by-law such as by-law 13, which purports to prohibit altogether the keeping of animals on a lot?

In McKenzie, the by-law in question did not prohibit the keeping of pets, but only the keeping of certain types of pets. Therefore, I concluded, it did purport to regulate, rather than to prohibit, a use of lots in the scheme – namely, the keeping of pets.

In prohibiting the keeping of pets altogether, the by-law in this case is analogous to a by-law that prohibited altogether a particular manner of using or enjoying a lot by carrying out building works. In Mineralogy, the Court of Appeal expressed the view that such a by-law would be invalid. Similarly, a by-law that prohibited altogether the playing of music in a lot would be invalid, whereas one that prohibited playing music above a certain level of sound between certain hours would be one regulating the use and enjoyment of lots.

In my view, a by-law that prohibits altogether the keeping of pets in lots is not a by-law regulating the use or enjoyment of lots, but purports to prohibit a particular use and type of enjoyment altogether. It therefore goes beyond the scope of a valid by-law permitted by s 169 and is invalid."

See also Courier Mail story.

AFR: Qld Property Due for Kick Start

Extract from Story in the AFR:

For years now, much of Queensland has been a home-grown testament to how property booms can go dreadfully wrong. But a select few see the parlous state of the Queensland housing market as a rare opportunity to pick up homes with great growth prospects at bargain prices. Many see the landslide election of the LNP government as a key catalyst.

Earlier in March, private equity firm Engage Capital bought 19 luxury apartments from the Bank of Scotland in The Macrossan tower in central Brisbane, developed by Macquarie Group. Engage Capital director Ben Grootemaat says he paid about $1 million less for each apartment than off-the-plan prices. He thinks Brisbane values have bottomed and he plans to sell the homes straight away, claiming there is strong demand for the right kinds of apartment at the right price. “There is a lot of demand, especially for three-bedroom residences,” he says. “We have a strong level of interest.”

He’s not the only one positive about the sunshine state. Veteran developers Ken Woodley and David Devine founded apartment developer Metro in March 2010. Since then they have bought or are in the process of buying 2500 apartments in inner-city Brisbane. Woodley says the company sold more than 450 apartments last year, and hopes for a similar result this year. The drivers he is banking on are a tight rental market and the influx of resources employees.

“Because of the huge influx from the resources companies in the office towers, I think what is going to happen within six months is people will have to pay three months’ to six months’ rent in advance to secure an apartment,” Woodley says. “There really aren’t many being built.” But he’s also hoping a confidence boost will come with the reforms new Premier Campbell Newman has promised to deliver in his first 100 days in office. One is stamp duty exemptions for the principal place of residence, which may become law on July 1, costing the government $900 million.

Combined with more interest rate cuts that most banks are still expecting, housing will become more affordable. “I would think those two things would kick start the market,” Woodley says.

The value of houses in Brisbane fell 7.6 per cent in the 12 months to the end of February, according to RP Data Rismark, the worst decline in any mainland capital. The fall in values and dearth of credit have caused a plunge in building. Mirvac research figures show per capita housing levels in Queensland have plunged to their lowest levels since about 2002. But Hoke Slaughter, Morgan Stanley head of real estate investing in Asia, believes the supply-demand picture in Queensland will be “quite attractive” when the market finally recovers. And there are certainly some bargain prices on offer.

Queensland has been littered with receivership sales. Receivers KordaMentha predicted last month there would be an increase in the volume of distressed assets put to market in the state this year as financial institutions attempted to clean up their loan books. Savills agent Greg Harris is selling new townhouses on the Gold Coast that were once priced at $635,000 for about $500,000. He says although prices have fallen 30 per cent, rents haven’t.

Australian Property Monitors senior economist Andrew Wilson says some “green shoots” are emerging in Brisbane. Home values fell 1 per cent in the three months to February, according to his figures, a slower rate of decline than last year. There were other early signs of improvement, such as an increase in home loans and positive feelings about the new government, which may improve buyer sentiment. “The whisper around is we’re just starting to get some early cycle momentum in that Brisbane market,” Wilson says. “With the election behind them, there is always a honeymoon period for the market, which can lead to a more positive attitude.”

Evolution Sales - Massive Losses for Investors

I have written in the past about Evolution, and how Citimark sold these apartments off-the-plan at high prices.  It is not the greatest quality building in my opinion.  Most of the original buyers from Citimark were Korean.  Evolution opened in 2008.  Here is some recent sales evidence:

• Apt 245, sold off the plan in 2006 for $767,500.  Resold in November 2011 fully furnished for $605,000.
• Apt 184, sold off the plan in 2006 for $660,500.  Resold in November 2011 for $460,000.
• Apt 153, sold off the plan in 2009 for $570,000.  Resold in October 2011 for $410,000.
• Apt 276, sold off the plan in 2006 for $701,000.  Resold in September 2011 for $620,000.
• Apt 163, sold off the plan in 2007 for $649,500.  Resold in September 2011 for $435,000.
• Apt 194 sold off the plan in 2006 for $512,720.  It is currently listed for sale for $510,000.  Based on the above, it will be lucky to be sold for above $460,000.

This shows massive capital losses for each of these buyers.  Take care when buying from developers off the plan.  Take extra care if buying from Citimark!

Ray White Auction Results

I went to the Ray White auction yesterday.  Some results concerning apartments:

• Apt 2804 Charlotte Towers, 1 bed, 1 bath, no car - sold prior to auction
• Apt 2808 Charlotte Towers, 2 bed, 2 bath, 1 car - sold for $510,000.
• Apt 3409, Festival Towers, 2 bed, 2 bath, 1 car - passed in at $480,000.
• Apt 287, River Place, 2 bed, 2 bath, 1 car - unsold, inspect now!

My reflections on the inner Brisbane apartment market

Here are my thoughts based on my non-scientific observations:

• Most of the apartments sold in inner-Brisbane in the past year have been one bedroom apartments.
• Thus, the medium price will be lower, because the kind of apartments selling are the smaller, cheaper apartments.
• However, many apartments are being sold below the previous sale price for that same apartment.
• In a number of buildings, the prices being achieved for apartments are equivalent to prices in 2007.
• Two bedroom apartments above $600,000 are not selling.  If they do sell, the contract often crashes.
• In some quality buildings, prices have not deceased, but there have been few sales.
• Vendors are discounting if they need to sell.
• Rents are increasing, but so are body corporate fees.
• Apartments being sold off-the-plan are being sold at prices that well exceed the price of similar existing apartments.

A sample of sales from a Ray White report is set out below.  (Double click on image to see larger version.)

RP Data Capital Market Report

RP Data's recent Capital Market Report 2012 had the following information regarding Brisbane:

• Brisbane's capital gains have been well below the combined capital city average since 2009.
• Compared to Brisbane's long-term and medium term gains, the last 12 months has recorded an extremely weak performance.
• Brisbane sales volumes are currently at their lowest levels since 1996.
• Average discount levels across the city current sit at 8.8% for apartments (compared to 2010, when it was 7.4%).
• Apartments in Brisbane are currently taking an average of 72 days to sell (compared to 55 days to sell for the 12 months prior).
• For the apartments sold in 2011, the average hold time was 7 years.

Another Milton Development

Walker Corporation announced it had bought land in Brisbane's inner west to embark on a new a $100 million-plus development with shops and 243 apartments across two towers, 12- and 20-storeys high.

Walker Corp has bought for a new mixed-use project at Milton in Brisbane was sold by Mominvest C, a company owned by Sydney-based John Hayson. The 3240sq m property fronting Milton Railway Station on Railway Terrace is an amalgamation of eight housing lots, with development approval for 243 apartments and shops.

Walker Corp plans to build one- and two-bedroom apartments priced between $420,000 and $550,000 within the traditionally industrial and low-density residential area where the Lion Nathan Brewery is also located. "Our project will provide high-quality, yet affordable accommodation for young people, who want to live less than 2km from the CBD," Mr Walker said.

The purchase is diagonally opposite FKP's The Milton project (at one time called Union).  According to the AFR yesterday, The Milton is close to 50% pre-committed (whatever that means).  It will be interesting to see if the Walker buildings block the views from The Milton.

See The Australian and AFR

The risk of falling prices

Financial comparison website RateCity CEO Damian Smith said borrowers who have taken on a home loan with a small deposit are most at risk from the impact of falling prices.

For example, if a property was purchased for $400,000 with a 5 per cent deposit, but then that house price fell by 10 per cent, instead of having $20,000 of equity value in the property, there would be none at all.

"If you try to refinance in those circumstances, you will find yourself owing more than the property is worth - a mortgage of $380,000 as against property value of just $360,000," Mr Smith said.

Average Australian capital city property values fell by 3.6 per cent in 2011, according to the latest RP Data-Rismark Home Value Index. For a $400,000 home, that decline translates to a new value of $385,600. Property values declined in every capital city with Brisbane experiencing the biggest fall of 6.8 per cent. Full story here

Where will the next Apple Store be in Brisbane?

An Apple Store was tipped for Macarthur Chambers on Queen Street, but it has not arrived.  A story in Brisbane Times suggests it has been delayed due to a contractor going bust.

Laing O'Rourke reports that it has signed up a two level Apple store at its McLachlan & Ann (M&A) building in the Valley.  See Press Release.

The Apple Press Release website had no news last time I looked, but the Apple job website says that there will be a new store in Brisbane.

I suspect it will be a positive influence to have an Apple Store nearby.

Negative Equity

The share of homes with mortgages worth more than the property's value increased at the end of last year as the housing market stalled and prices turned lower. The rise suggests an increase in negative equity, where a mortgage can be worth more than the value of a house. Property information group RP Data said that 6.4 per cent of homes were valued at less than their purchase price in the December 2011 quarter, rising from 4.9 per cent of the market in the September quarter. By city, Brisbane fared the worst with 9.2 per cent of property deemed to be "underwater" in financial terms, followed by fellow mining state capital Perth at 7.4 per cent.
See Brisbane Times, Smart Company and Business Spectator

Newstead Riverpark

"Developers FKP and Mirvac are major players in the quest to turn 17ha of prime riverfront land into a vibrant new community.  Located only 2km from Brisbane CBD, the Newstead Riverpark urban renewal precinct will become a residential hub, dining and entertainment venue, shopping destination and employment district."
Full story here.

Low rise or high rise apartment?

"First-time property investors buying off the plan should consider low-rise apartments over high-rise units, according to developers and market analysts."
See Property Observer

Real Estate Agent Blog

Here is an interesting blog designed for real estate agents, to help them obtain listings and sell property.  If you are selling or buying, it is good to read about what real estate agents are doing or should be doing.

Number of Dwellings Sold in Brisbane

In Brisbane, in 2003, over 73,000 dwellings were sold.  In 2007, over 69,000 dwellings were sold in Brisbane.  However, in 2011, only 34,300 dwellings changed hands.

This was the lowest number of properties sold in any year in Brisbane in the past decade.

RP Data says:
"Clearly 2011 was a very weak year for housing transactions. The higher interest rate environment throughout much of the year and the general conservative nature of consumers were likely to be the biggest influences on such a low volume of sales. We are anticipating transaction volumes will pick up over 2012 due to slightly more favourable conditions."

See Article from RP Data

Vine on Russell Prices

Vine on Russell was recently released by Aria Property Group.  It is located in South Brisbane, opposite Musgrave Park.  Construction to start in June and to be completed in mid 2013.

As at the end of the first week in March, after about 3 weeks of sales activity, 50 of the 56 apartments were reported as being sold by the developer.  This is a fantastic result, or the developer is not being truthful, take your pick.

Some pricing for the apartments that remain for sale:

• Apt 702, a studio apartment, 55 sqm internal, $446,000
• Apt 303, a two bedroom apartment on the corner of the building, overlooking Cordelia St (which is a major road, and noisy), 73 sqm internal, $609,000
• Apt 705, two bedroom on Cordelia St, 75 sqm internal, $614,000

Looking at current sales of quality apartments in the inner city apartments, and what is currently listed for sale, these prices seem to me to be outrageously high for small apartments with few facilities that are located on a major road.  Obviously, 50 purchasers don't think so.

Who is buying and what are they buying?

From the hsbrisbaneproperty.com.au newsletter from an agent that specialises in mid-priced inner city Brisbane apartments:

Usually buyers are hot-off-the-mark in January, however this year we’ve seen buyer interest only gradually increase in January with a marked jump in February. This also translated into sales and is a positive indication of the year to come. In fact, we recorded more buyers signing contracts than in any other month over the last two years.

What are people buying? The trend to properties up to $500,000 continues within the CBD. Although there is and always will be certain demand for top-end properties, $500,000 seems to be the upper limit for the majority of buyers, particularly investors, at present. One bed units were the ‘property of choice’ in February, probably due to their perceived more affordable price.

Who is buying? Both owner occupiers and investors were busy in February. Currently, the tightening CBD rental market is directing some tenants into property ownership as the most viable alternative. This is not only true for young professionals, but also for overseas students not able to find CBD rental accommodation. On the investor front, we recorded significant interest from overseas buyers, particular from China.

Apartment Prices Strengthen says REIQ

From an REIQ Press Release issued today:

The Queensland unit and townhouse market is showing healthy signs of recovery with many areas across the State posting median prices increases over the December quarter, according to the Real Estate Institute of Queensland (REIQ).

The REIQ quarterly Queensland Market Monitor, which tracks median property prices and rents across the State, found that prices in the fourth quarter of last year rebounded in most areas of South East Queensland.

"What we are starting to see is that as 2011 progressed, so did confidence levels in our property market with prices beginning to strengthen," REIQ CEO Anton Kardash said. "Many regions posted their most robust price results this quarter since prior to the natural disasters at the beginning of last year. As we move into 2012, REIQ accredited agencies are reporting healthier levels of enquiry with first home buyers and investors especially taking a keen interest in the more affordable unit and townhouse market."

According to reiq.com, there are more than 5,000 listings for Queensland units and townhouses currently for sale under $350,000. The median unit and townhouse price in Brisbane increased 2 per cent to an even $400,000 over the December quarter. On the Gold Coast, it increased 5.3 per cent to $350,000 and was up 2.1 per cent to $245,000 in Toowoomba.

See similar story here.

Photomontages Misleading

"Up to 90 per cent of photomontages produced for development applications could be misleading, architects and planners say.  An architect and planner at Dickson Rothschild and visiting professor at the University of NSW, Nigel Dickson, said such images should be verified independently."
See Domain.
I think a similar point could be made about computer generated renderings for off-the-plan sales brochures.

Vine on Russell, at South Brisbane

Another apartment building from Aria in South Brisbane:  Vine on Russell, which is on the corner of Russell Street and Cordelia Street (a busy main road), overlooking Musgrave Park.

An 8 storey building, with at total of 56 apartments, either 1 or 2 bedroom apartments.  No pool.

Campbell Newman and Apartments

Campbell Newman, when at Brisbane City Council, introduced the "parity factor", in relation to rates paid to the Council by Brisbane apartment owners.  Until this time, all rates in Brisbane were calculated based on the unimproved value of the land (regardless of the house or buildings on the land).  Under the "parity factor", apartment owners are now assessed taxes at a high rate than house owners.  In effect, house owners are taxed based on the unimproved value of the land, but for apartment owners, the tax takes into account the improvements on the land.  This doubled or tripled the rates for a number of apartment owners.

For houses, if I build a $2 million house on land worth $400,000, and you build a $250,000 house on the block of land next door also worth $400,000, we both pay the same rates in Brisbane.  But if you build an apartment building with 8 one-bedroom apartments, then the rates over all for those apartments will be higher than for the $2 million house.

I guess Campbell Newman will be looking at ways to increase taxes if he becomes Premier, and I doubt that he will be friendly to apartment owners.

Portside and Hamilton Harbour

This photo shows how crowded this area of Hamilton will soon become with apartment developments.

Site A has development approval for 87 serviced apartments.  Site B has DA for 127 residential apartments.

Daily House Price Index

RP Data and Rismark have launched a daily house price index for Australian residential property.

"The RP Data-Rismark Daily Home Value Index aims to measure daily movements in the value of Australian housing markets. Rather than relying solely on transacted sale prices to provide a measure of housing market conditions, the RP Data-Rismark Daily Home Value Index is based on a ‘hedonic’ methodology which includes the attributes of properties that are transacting as part of the analysis. Understanding factors such as the number of bedrooms and bathrooms, the land area and the geographic context of the property allows for a much more accurate analysis of the true value of movements across specific housing markets."

RP Data website and The Australian and ASX website and Press Release.  And see this interesting article by Chris Joye, who was involved in developing the index.

For Brisbane apartments, the February monthly index is 380.90, which is down 5% year on year, and up 0.55% month on month.

Looking at the daily index for the past year, for Brisbane apartments, here are some index values:

• 1 July 2011 - 393.61
• 1 January 2012 - 391.58
• 1 February 2012 - 385.43
• 29 February 2012 - 386.68

Some of the lowest values of the index for Brisbane apartments over the past 12 months are as follows:

• 19 August 2011 - 385.66
• 25 January 2012 - 385.14
• 12 February 2012 - 382.57

Receivers Move Into Alderley Square

This blog reported recently that PCN's Alderley Square development was on hold.  The AFR reported on Thursday that receivers have moved into Alderley Square, due to a significant slow down in sales.

• Developer owes Westpac $12 million.
• Construction has not yet started.
• Off-the-plan purchases have dried up.
• Colliers reports 30 months of supply of new apartments in Brisbane.
• Alderley Square had 234 apartments across 3 buildings.
• In the first 12 months, $55 million of contracts, mostly to locals.
• In the next six months, only $4 million in sales, even with the $10,000 building boost.
• The AFR reports that buyer fatigue extends throughout south-east Queensland.
• At Australand's Yungaba project at Kangaroo Point, only 37 out of 167 lots have been sold, or about $33 million out of $150 million of stock.
• What will happen to PCN's El Dorado Indooroopilly development?
• See also story here and here.

Hamilton Harbour Press Release

HUNDREDS of new sales and settlements of residential apartments at the Hamilton Harbour mixed use development are signaling renewed confidence in Brisbane’s property market, according to developers Leighton Properties and Devine Limited.

During the November-January period, over 380 pre-sold apartments settled in the 22-level Harbour One and 19-level Harbour Two towers, completed in November 2011.  This now brings total settlements to more than 90 per cent of the 434 pre-sold apartments.

Project director John Campbell said, “Predominantly local buyers have been the driving force behind these sales and the average price of settled apartments is $526,000.  Pre-sales accounted for over 90 per cent of apartments in the two towers, a Brisbane record for the post-GFC environment.”

The 20-level third and last residential tower Riverside Hamilton, currently under construction and due for completion in late 2012, had sold 128 apartments (113 on unconditional contracts) by the end of January.

With Harbour One and Harbour Two owner occupiers moving in, and over 75% of investor purchased properties already rented, the first two towers are quickly filling up with residents.

“The average gross rental yield on one-year leases is 5.3 per cent across all stock, with one-bedroom and two-bedroom with study products achieving higher yields,” Mr Campbell said.  “Professional workers, couples and fly-in fly-out workers are boosting popularity of the leases on offer, with rents starting at $300 per week.

Mr Campbell said residents were also eagerly awaiting the opening of Hamilton Harbour’s commercial and retail precinct which would bring restaurants, convenience and boutique shopping right to their doorstep.

Local Investors Buying in Brisbane

New research indicates Brisbane property investors are the strongest buyers in their own backyard.  As investment activity returns to the city, PRDnationwide has found some 86% of recent property investors are Queenslanders.  The company's research director, Aaron Maskrey, says most of the property investors in the city came from inner-city suburbs, and they often chose to invest in the same suburbs.

Although housing stock is higher priced than unit stock and typically provides a lower gross yield, when closely analysed it is determined that approximately 50% of investors have purchased units, and the other half bought houses.

See Property Observer

Gold Coast Hilton

The Gold Coast Hilton development (originally developed by Rapits, a company that went bankrupt during construction) still has unsold apartments.  They are advertised as starting at $475,000, with two bedroom apartments with ocean views for sale at $565,000 and three bedrooms with ocean views for $765,000.

Casino Towers Auction Result

A sub-penthouse in Casino Towers (Apt 3803, 151 George St), recently sold at auction for just over $800,000.  This was a large two bed apartment, about 130 sqm internal.  It faced East, and did not have river views.

The owner/vendor purchased this apartment in August 2006 for $875,000, and so lost money.

The first owner purchased this apartment off the plan from Devine for $840,000 in 2005, and so over 6 years, this apartment went down in value.

Misleading Photo Montage

Some developers are known to produce misleading photo montages and computer generated images of their apartment projects to make them look better, so as to sell to off the plan purchaser.  He is a different spin on the story -- a developer submitted a misleading photo montage for development approval, to make the apartment complex look smaller so that local residents would not complain.  See story here.

Brisbane Property Strategy

Here is a story, where two Metropole agents have a discussion about the Brisbane property markets.  Listen here for what it is worth.  "A lot of segments of Queensland have hurt over the past 12 months."  Interestingly, they compare the decline in property values with declines in share prices -- but there are three additional factors to take into account here -- firstly, the income received from shares by way of franked dividends are much higher than net returns from property (good shares return about 3 times as much income as good property on average); secondly, most people who buy shares are not as highly leveraged as people who buy property, so a 6% decrease in value in property often is actually a 50% capital loss for a leveraged investor; and thirdly, shares a more liquid and have significantly less transaction costs compared with property.

House Prices in Queensland

The REIQ, which is the industry lobby group for real estate agents in Queensland, issued a press release today regarding Queensland house prices.  Note that this relates only to houses, and not apartments or units.  An extract from the press release:

One year on from the floods and Cyclone Yasi, the Queensland residential property market has stabilised, according to the Real Estate Institute of Queensland (REIQ).  The REIQ December quarter median house price report found property prices in South East Queensland recording mostly steady results, while the strong resources sector is driving demand and price growth in Central Queensland and the Darling Downs.
Over the December quarter, the median house price in Brisbane recorded a negligible fall of 0.2 per cent to $499,000 - the lowest fall in our capital city’s house price since September 2010.  Across Queensland, investor and first home buyer activity continues to strengthen with buyers recognising that prices have plateaued in many areas.  REIQ CEO Anton Kardash said the improving results showed that our state had begun to move on from 2011.  

‘‘Last year was a very tough one for everyone in Queensland with the series of natural disasters having a drastic impact on our economy as well as on confidence levels overall,’’ he said.  ‘‘With the first anniversary of these events now passed, it certainly appears that Queenslanders are feeling more optimistic about the future and this is starting to have a positive effect on our property market.  While it was too soon for the two interest rate reductions in November and December last year to be reflected in these results, we anticipate more positive news on our property market in the months ahead as these rate cuts flow through our wider economy.’’