View Tax

Apartment owners in Queensland are often taxed by local councils at higher rates than those of land owners or house owners.  People are starting to get upset by this.  In many cases the councils don't care, because the apartment owners don't live in the area and therefore can't vote.  See Sunday Mail story.

"Auctions A Bad Way to Sell"

Interesting report on Sunrise, that touches on real estate agents not reporting bad auction results.  See here.  Also discusses current uncertainty in property market.

Decreasing Market

According to Residex, the median sales price of Brisbane apartments dropped 3.48% in the year ending October 2011 and dropped 1.74% in the last quarter.

See Residex blog.

Foreclose and Bulldoze

See: The New Way To Foreclose

Hamilton One (also called Harbour One)

Here is a comment sent to me by a reader:

Recently, I arranged an inspection of apartments for sale in Hamilton One.  I am in the market so the request for an inspection was 100% genuine. 
The complex was only just finished. The thing that turned me straight off permanently in my particular situation, was that all the one bedroom apts do not have an oven to cook with and there is no provision for one, just a two-burner gas top. They have put in a movable bench-top convection microwave. It would be impossible to put a small gas BBQ on the balcony because the balcony’s are essentially closed in albeit for the concertina sliding windows which are up at about eye level upwards so the gas BBQ would essentially be inside, a VERY BIG no-no.  Of course, horses for courses and some people don’t cook, (I suppose??) so they may see that as a plus. Micro-waved and wok-cooked food does not appeal to me personally. 
While prices are advertised at $300,000 for one bedroom, that’s with a view of other high rise buildings, and no car park. I guess if you don’t have a car that’s fine, why pay for one if you don’t need or want it? I personally could not do without one. Therefore for me with a car, I think from memory (check for yourself) that one needed about a $415,000 start to have a car park however, that did include a reasonable view (in my opinion) since the one brm apts with car parks are on higher floors than those one brm apts without a car park. 
The concertina windows when open did seem to provide good ventilation and individually controlled ducted air con is throughout. The apt’s did have plenty of natural light which I thought was good, though another seven story complex is now under construction on the Nth side so that may impact on light, maybe not. 
Comms are Optus only. I personally did not like that “no-choice” option. According to the agent, hot water is individually metered from a central (gas??) boiler that distributes hot water around the complex and water is individually metered. I’m not sure how one went about getting electricity. I wonder what the unit rate for those utilities is? Foxtel is wired in, buy it yourself if you want it. 
The sales agent while quite pleasant seemed otherwise busy so other than a couple of apartment configurations, I was not shown around the complex to see the pool and any other facilities that may be there. I saw one pool though I think there may be two???

RP Data's Summary

Here are some interesting slides from an RP Data presentation.  Double click in the slides to make them larger.

Brisbane at the bottom?  Value Growth Starts to Improve on an Annual Basis

Brisbane transaction volumes have once again weakened:

Rental Rise in Brisbane

Number of properties advertised for sale has increased to record levels

Buying Off The Plan from Juniper

A number of people have asked me whether now is a good time to buy an apartment on the Gold Coast, particularly at Juniper's Soul building that is almost complete.

According to a number of property experts, the Gold Coast property market is still in decline, and further price falls are expected.

Let's look at Juniper's immediate prior luxury development, which is Oceans Mooloolaba.  Did buyers from Juniper do well or not?  It is sometimes hard to tell looking a public data, because Juniper gives under the table rebates to purchasers, so the exact initial purchase price from Juniper is not necessarily what is reported to the government.

Here is the evidence:

• Apt 704, sold by Juniper for $2,500,000 in 2005; resold in 2011 for $1,805,000.
• Apt 606, sold by Juniper for $1,580,000 in 2007; resold in 2011 for $1,650,000.
• Apt 503, sold by Juniper for $1,300,000 in 2007; resold in 2009 for $1,070,000.
• Apt 404, sold by Juniper for $1,380,000 in 2005; resold in 2007 for $1,200,000.
• Apt 404, sold by Juniper for $1,370,000 in 2003; resold in 2006 for $1,150,000; resold in 2010 for $1,115,000.
• Apt 401, sold by Juniper for $1,670,000 in 2003; resold in 2009 for $1,500,000.
• Apt 303, sold by Juniper for $1,320,000 in 2006; resold in 2007 for $1,025,000.
• Apt 301 sold by Juniper for $1,600,000 in 2003; resold in 2009 for $1,445,000.
• Apt 203, sold by Juniper for $1,750,000 in 2004; resold in 2010 for $1,800,000.

Taking into account stamp duty, everyone who has purchased from Juniper and then resold has lost money.  Some of the resales were before the market collapsed in 2008.  One suspects that it would be best to wait before buying in Soul or anywhere on the Gold Coast for that matter.

Northshore Hamilton

The $5 billion Northshore Hamilton urban redevelopment is underway, with thousands of apartments expected to be built in the next 10 years.  About 15,000 new residents are expected to move into this area, which is an old port and industrial precinct 6 km down river from Brisbane City.

• Two Devine apartment buildings are almost complete, with a third on the way.
• Brookfield Multiplex is building another Portside apartment building, Promenade (172 apartment), with two more planned.
• Citimark has development approval for Rivana, 15 levels with 208 apartments.
• Mirvac has a three building apartment complex planned, with a sales display office constructed onsite.
• Australand has launched 78 apartments as part of its $400 million project, Hamilton Reach.

Will there be an oversupply of small, non-riverfront apartments in this part of Hamilton, where there are few facilities and not much within walking distance?

Apartment Fire

Sad news.  There was a fatal fire in an apartment at Inn on the Park at Toowong this week. A lady died in her apartment.  Story and photos here.

Soleil's Pricing Not Holding Up?

Meriton's Soleil is partly completed, with settlements reportedly having occurred on the lower floors.  The top part of the building is still under construction.

Another blog reports that Meriton's list prices for Soleil are decreasing (I have not verified these numbers):

"1 July
Studio $350,000
1 Bedroom $380,000

25 July
Studio $340,000
1 Bedroom $375,000

11 August
Studio $330,000
1 Bedroom $365,000

1 November
STUDIO $306,000 - $325,000
1 BEDROOM $325,000 - $445,000
2 BEDROOM + CAR SPACE $565,000 - $818,000
2 BED + STUDY + CAR SPACE $653,000 - $689,000
3 BEDROOM + 2 CAR SPACES $750,000 - $877,000

4.5% Vendor Finance
$10,000 QLD Building Boost
$17,000 First Home Owner Bonus"


Listed on Domain today:

• 1 bed, no carpark - $403,000
• 2 bed, 2 bath, 1 carpark - $569,000 to $818,000
• resale by overseas buyer: Apt 5204, 2 bed, 2 bath, 1 car: $590,000 negotiable
• resale by overseas buyer: Apt 4803, 2 bed, 2 bath, 1 car: $630,000

As stated in a prior blog post, most buyers appear to be offshore buyers from China, and at the current sales rate, it will take 2 to 3 years for Meriton to sell all its stock in this building.

Two Queensland Buildings

From a recent article by Matusik: A Tale of Two Queensland Buildings

"Firstly, an investment dwelling’s worth should be determined by income – that means rent – just like it does for offices, shops and factories.  It shouldn’t be determined by a “comparable” resale.

Secondly, how and where the developer spends his or her money on a project shouldn’t affect the market’s (nor valuers’) perception of value.

• An investment’s value shouldn’t be determined by what a buyer once paid but by its income.
• The distribution of costs has no bearing on the end value of a product."

Full article here.

Rivé Apartments

Rivé Apartments near the Breakfast Creek Hotel are nearing completion.

One bedroom (77 sqm total) from $409,000.  Two bedrooms (106 sqm and larger) from $545,000.  See post below regarding Vecchio's prior development.

Improving Market?

It is useful to look at recent sales of apartments, and compare the price at which the apartment sold with the price that the vendor originally paid for the apartment.  In find this is more useful than looking at medium or average prices.  For example, if a building has a mix of 1 and 2 bedroom apartments, and for the last six months, only 1 bedroom apartments are sold, then the medium price will decrease.  This does not tell us whether the 1 bedroom apartments went up or down in value.

I recently had a look at sales in the Fresh Apartment building on boundary where Taringa mets Toowong, at 20 Campbell Street.   This building had its carpark flooded in the 2011 floods, but no apartments had water in.  The two magnificent pools were not flooded either.  It was developed by Vecchio, who is currently developing Rive Apartments (see post above.)

Apt 20:.  This apartment is 2 bedrooms, 2 bathrooms, 120 sqm (85 internal, 35 balcony).  In March 2007, it was advertised off-the-plan for $459,000.  The next year, it was still for sale off-the-plan for $504,000.  It was sold by the developer in May 2008 for $566,000 (probably this was above market price).  The first owner then resold it in November 2009 for $537,000.

Apt 23:  This is a 3 bedroom, 2 bathroom apartment, with a North East Aspect over the pool.  It is 148 sqm in total. It was sold off-the-plan for $669,000 in July 2007.  It resold in September 2011 for $569,000.

Apt 54:  This is a 3 bedroom, 2 bathroom penthouse apartment.  It is 117 sqm internal plus a large 84 sqm balcony..  It sold off-the-plan in April 2007 for $807,000.  It resold in August 2011 for $600,000.

So take care when buying off the plan or from a developer.

Devine's Hamilton Harbour

Hamilton Harbour is a three building apartment complex (plus one additional building of commercial space) currently being developed by Devine.  Two of the three buildings are almost complete.

According to Place Real Estate Agents, across the three buildings there are 658 apartments.  There are 125 apartments remaining for sale (mostly in the third building).  In the September 2011 quarter, 14 apartments sold (about one a week).  At this rate, it will take 26 months to sell the remaining apartments.

One beds are listed for rent from $300 a week, two beds from $510 a week, and three beds from $850 a week.

Here are some recent photographs, taken from the Portside area, of the two finished buildings.

Two Books

Before buying or investing in an apartment in Queensland, you should consider these books:

• Buying An Apartment Off The Plan in Queensland - A Guide For Successful Buying
• Investing in Brisbane Apartments - A Guide for Successful Investing

I see that BigW is now selling Kindle Book Readers.

111-222 Billbergia Apartment Tower Approved

The Brisbane City Council has approved the massive 111-222 apartment and hotel tower for Brisbane.  (See prior post here.)

There will be two towers as part of this development.  The large tower will be 90 storeys, located at 222 Margaret Street.  It will be a hotel from level 5 to level 21, and apartments from level 24 to level 88.  This building, if constructed, will be the tallest in Brisbane according to Brisbane Times.  If you want to buy an apartment, you can register on this website:  www.111plus222.com

The second smaller tower will be commercial office space, located at 111 Mary Street.

These two towers will have a major impact on the apartment building located at 212 Margaret St next door, and will also impact some views from Charlotte Towers.

New William Street Building

Echo Entertainment, who operate the Treasury Casino and nearby Treasury Hotel, are planning a new 5 star hotel at 159 William Street.  The published renders show Casino Towers in the background.  It appears that Oaks Casino Towers will have some of its river views blocked by this 400 room hotel.

Buyer Confidence Improves

The AFR had a story on Thursday about Brisbane apartments, "Buyer Confidence Improves" (p. 55).  Highlights from the article (copy available here):

• Thousands of new apartments in Brisbane's inner city have helped boost sales volumes 30% in September quarter compared with the June quarter, but the number sold is still substantially lower than the same period in 2010.
• 312 new apartments sold in September quarter, according to Place Advisory research report
• Influx of new projects scheduled for next year - 1000 new apartments are expected to come onto the market in the first half of 2012.
• 2059 new apartments currently for sale in Brisbane
• Average sales price was $580,529.
• "The Brisbane market is at the bottom of its cycle and we are now starting to see an increase in inquiry and sales activity" according to Mr Walker from Place.
• Most of the sales appear to be to overseas and interstate buyers.
• "The biggest positive is the local buyers are yet to enter the market. ... As consumer sentiment improves, they will start buying again."
• The influx of new units, particularly in urban renewal precincts such as Hamilton riverfront, Newstead River Park, and Show Ground Hill, could limit the market's recovery.
• Agents said too much choice and concerns about whether the market has hit bottom could constrain buyers.
• Urbis property economics consultants said Brisbane has a long-term undersupply problem.

Luxury Apartment?

Old time property developers, David Devine and Ken Woodley, now of Metro Property Developments, specialised in low end high rise apartments.  They are advertising one of their many new developments, Brooklyn on Brookes, as "Luxury Valley Apartments from $305,000".

I wonder what makes these apartments "luxury"?  Sure, they will be new, but a new apartment does not mean it is luxurious.  Let's look at the facts:

• built on a main road, Ann Street
• no city or river views from most levels
• 191 apartments, most with only one bathroom
• small apartments
• no separate kitchen
• bathrooms do not have separate bath and shower
• little cupboard and storage space in apartment
• no balcony

In my view, calling these "luxury apartments" is seriously misleading.  Buyers beware! 

River Place Auction Sale

From a Ray White email:

"Brisbane's CBD Prestige Market Is Running Hot!!

This morning over 100 people attended the auction for 326/82 Boundary Street, a River-front penthouse in River Place.

With 18 registered bidders there could only be one outcome, a successful sale reaching $1.497M!

This proves there are buyers out there wishing to secure quality properties within the Brisbane CBD."

Brisbane Rental Vacancy Rate Tightens

Rental vacancy rates across many areas of Queensland have tightened over recent months, according to the latest Real Estate Institute of Queensland (REIQ) data.

The REIQ’s September residential rental survey found the low number of investors in the property market contributed to the tightening of vacancy rates between June and September this year.

“The number of investors in Queensland continues to be below historical averages. What this means is that there is not the usual number of investment properties being added to the overall rental pool, which is putting a strain on supply,” REIQ managing director Dan Molloy said.

“The recent interest rate cut, as well as soft property prices, are likely to make investment property a more attractive proposition for investors so we will hopefully see more activity from this type of buyer in coming months. Many renters are also opting to stay put, perhaps due to the ongoing economic uncertainty, which is also have an impact on supply.”

The vacancy rate in Brisbane is 2.3 per cent. Brisbane City’s vacancy rate eased slightly, largely due to easing conditions in the 5km-plus zone, despite Inner Brisbane experiencing tighter vacancy rates since the end of June.

In terms of median rents from the Residential Tenancies Authority, these tighter conditions have only been reflected in weekly rents in the south-west and north-western suburbs, both up $20 and $25 over the September quarter for three bedroom houses. For the outer suburbs, new developments coupled with the return of renovated flood- affected properties coming back into the rental pool have contributed to the increase of supply.

Good or Bad Times?

Here are two conflicting articles, published on the same day in Property Observer.

1.  Next year could be the best year in a decade to buy property.

2.  Australia's housing bubble will eventual burst.

Who should you believe?  Who knows?

My view is that, at least for Brisbane, now is a good time to buy established, well located residential apartments, if you plan to buy and hold for the long term.  In my view, not a good time to buy off the plan, but some off the plan developments seem to be doing well.  For example, it is reported that in the first stage of the first building in the Showground Hill development, namely The Green, all the available apartments sold out in about 3 hours.  Not sure how many apartments were actually available -- they may have actually only sold ten apartments!  In any event, there must be some buyers signing contracts.

Disclosure of proposed or planned works

Here is a note from a reader, and it is a good reminder to do as many searches as possible and ask questions of as many people as possible before signing a contract for an apartment.

"Here is Winchcombe Place Apartments at 15 Vernon Terrace in Teneriffe (a.k.a. Newstead).  Underpinning of the building is taking place.  The front stairwells that exit to the street were recently underpinned as they had “parted” from the main building with cracks about 40mm in width appearing between the two. 

These photos show the huge cracks at the rear of the building which is currently being underpinned.  Several units in this complex were on the market prior to the work commencing.  I looked at one at an “open” a few months prior to the work commencing and was unaware this work was to occur.  Glad I didn’t buy one and then find this out.

The agent didn’t tell me anything about it when I inspected  the apartment in March 2011.  I’ve since learned a levy had been struck to pay for the underpinning.  I’m not saying the agent was dishonest, perhaps he did not know, only that I was not told. Perhaps I should have asked about proposed or planned works.  Had I made a successful offer, I would not have been very happy to discover this and the extra levy that records show had already been struck at the time of inspection in March. Buyer beware!"

Gold Coast and Soul

Herron Todd White says that the Gold Coast apartment market is still in decline.

It will be interesting to see how many of the Soul apartments actual settle.  Some photos of Jupiter's Soul -- the place looks bare and barren.

Luxury Brisbane Units

"As units go, there are a few very nice projects mostly on the river, with views and close to the city that have experienced good money, but sales have been rare. Scott Street, Kangaroo Point as well as the Tom Dooley projects are the places to find serious unit money but even these have seen a slower sale pace. The problem is that many buyers are empty nesters looking to purchase subject to the sale of their own riverfront homes which, of course, creates problems."

See HTW Report

No Views at Bella Vue - Contract Terminated

A recent Queensland Supreme Court decision worth noting:  Nifsan Developments v. Buskey.  Mr Buskey purchased a penthouse apartment off-the-plan from Nifsan in the Bella Vue complex at Emerald Lakes.  The contract price was over $1.5M.  Before signing the contract, the sales agent told them about the uninterrupted views that the apartment would have.  However, the developer was planning a building in front of the apartment that would block the views.  The court rescinded the contract, and Mr Buskey got his deposit back.

Interestingly, the developer had a policy of not telling its sales agents about relevant information.  The sales agent may be honest, but being kept in the dark by the developer.

Also, the evidence before the court was that the apartment was not worth $1.5M when the contract was signed, and was now worth about $800,000.

Extreme care must be taken when buying off the plan.  You may be paying way too much. What the sales agents tell you may not be true.

See full text of decision.

Price Guestimates

OnTheHouse is launching a "Guesstimates" service, to provide an educated guess of property values.  See OnTheHouse.  It will be interesting to see how accurate this service will be for Brisbane apartments.

RP Data - market correction slows in September 2011

Consistent with RP Data and Rismark's forecasts, Australia's housing correction appears to be slowing. In September, capital city home values had their best result in 7 months (down just -0.2 per cent seasonally-adjusted and raw) while regional house values rose +0.1 per cent (s.a.).

Including rents, total returns are +0.7 per cent over the first nine months of 2011 and +0.9 per cent over the 12 months to end September. 

According to the market-leading RP Data-Rismark Home Value Index, which captured nearly 251,000 sales in the first nine months of 2011 alone, Australia's soft housing market may be starting to turn the corner. The RBA's decision tomorrow will determine whether the commencement of any recovery occurs quickly, or is more elongated into 2012. Since 90 per cent of all home loans are variable rate, housing is one of the most interest rate sensitive sectors of the economy.

 In the month of September, capital city dwelling values declined by just -0.2 per cent (both seasonally-adjusted and in actual raw terms). This was the smallest decline since February 2011 and was crucial in reversing a trend of accelerating capital losses since end March 2011.

Over the first 9 months of 2011, capital city home values have now declined by -3.6 per cent. In the 12 months to 30 September, capital city home values were off by -3.4 per cent.

RP Data's research director, Tim Lawless, said, "In the month of September there were wide divergences in the performance of the individual cities. In contrast to recent index results, seasonally-adjusted dwelling values actually rose in Brisbane (+0.4 per cent) and Adelaide (+0.5 per cent). They were flat in Darwin (0.0 per cent) and down just slightly in Perth (-0.1 per cent)."

Rismark executive director, Christopher Joye, added, "With home buyers budgeting on 2-3 rate hikes in 2011 that never eventuated, the housing market has been weighed down by concerns about families' future finances. The RBA's apparent switch to an "easing bias" has taken hikes off the table with the financial markets pricing a high probability of a rate cut on Tuesday.

Rismark forecasts imply that a reduction in interest rates on Tuesday, which could see discounted variable home loan rates fall to as low as 6.6%, would kick-off a recovery in housing activity. Based on our assumption that there were more hikes to come in this cycle, we had been projecting the recovery would commence in around mid 2012. This timing would be brought forward a quarter or two by any decision by the RBA to normalise its cash rate tomorrow."

  Rismark's Christopher Joye commented, "Notwithstanding the extraordinary hysteria whipped about house price bubbles and so forth, the fact is that the gross total return of 0.7 per cent generated by Australian housing in 2011 is very reasonable in the scheme of things. Indeed, it looks positively attractive compared to the extreme volatility, and stunning losses, sharemarket investors have had to endure." 


The number of homes advertised for sale remains high, which RP Data's Tim Lawless suggests is one of the key explanations for the secular softness. "We are counting almost 300,000 homes advertised for sale across Australia, which is more than 30 per cent higher than the same time last year. Melbourne supply is especially plentiful, with listing volumes more than 60 per cent higher than a year ago. The large number of properties available for sale implies buyers will continue to hold the balance-of-power at the negotiation table," he said. 


Source: RP Data Press Release

Brisbane Apartments (for period ending September 2011) - Capital Growth:

• Month = 3.2%
• Quarter = 3.2%
• Year to date =  negative 0.8%
• Year on year = negative 0.9%
• Median Price for settled sales of apartments in Brisbane over quarter = $365,000

Brisbane Sales Volumes

Here are the number of properties sold in the 4000 post code area each year.  This volume includes apartments and houses in the downtown Brisbane area and Spring Hill.  Mostly, it will be apartments.

• 2007 - 1,342 properties sold
• 2008 - 729 properties
• 2009 - 825 properties
• 2010 - 525 properties
• 2011 - year to date reported sales - 254

Charlotte Towers - Recent Sales Results

There have been 5 reported sales of apartments in Charlotte Towers in the July 2011 to October 2011 period.  Charlotte Towers was developed by Devine, is managed by Oaks, and is located at 128 Charlotte Street, Brisbane.

All sales have been one bedroom, one bathroom apartments, without a car space for parking.

• Apt 3101 - sold for $313,000
• Apt 2605 - sold for $325,000 (purchased off the plan for $326,000; listed for sale at $349,000)
• Apt 1406 - sold for $306,000 (purchased off the plan for $291,000)
• Apt 609 - sold for $302,000 (purchased off the plan for $295,000)
• Apt 3309 - sold for $302,000 (purchased off the plan for $347,000)

Taking into account stamp duty, legal costs, and real estate agent fees, all five of these original owners sold at a loss, and is some cases, for a loss greater than 10% (not taking into account inflation, interest costs and any furniture packages that may be been purchased -- so the overall loss will be somewhat more substantial.)  There are big risks in purchasing off the plan from the developer, and buying an apartment in Brisbane as an investment is not so easy.

Also, note that the highest reported sale for the whole building, for a four month period was $325,000.

With a tower being built across the road, values are unlikely to increase for some time.

Ray White Auction

From Ray White:  "The Urban Living Group auctions were held last Saturday at The Emporium Hotel where 52 properties went up for sale under the hammer.  A great day was had with a crowd of over 200 people attending the event and 79 registered bidders on the day.  The auctions kicked off with a bang selling 7 out of the first 8 properties, with 13 out of the 26 in the first section selling at a 50% success rate. The second section of the day was far tougher with 7 out of the 26 properties selling under the hammer, but with negotiations on multiple properties we believe we will have over 80% sold by the end of next week."

Charlotte Towers

Apt 3101 sold for $313,000 (1 bed, no car)

Aurora

Apt 236 passed in at $490,000, now listed for sale at $525,000 (2 bed, 2 bath, 1 car)

Apt 458 passed in at $450,000, now listed for sale at $480,000 (2 bed, 1 bath, 1 car)

Apt 534 passed in at $925,000

212 Margaret

Apt 2103 passed in at $340,000, now listed at $375,000 (1 bed, 1 bath, 1 car)

Admiralty Quays

Apt 67 at 32 Macrossan St did not sell at $560,000 (1 bed, 1 bath), but now listed as sold.

New Pradella Development in South Brisbane

Pradella is planning a new off the plan apartment building in South Brisbane.  It is somewhat near the Art Gallery, and according to Pradella, will have "spectacular views at a very attractive price point".  The website does not give much detail.  Completion is forecast for 2014.

Property Bubble in Australia is a Myth?

"It is true that real estate agents have a vested interest in not wanting to see the market portrayed as total doom and gloom. Such predictions can really be a dampener if you are trying to sell your home.

But are we really about to suffer massive house deflation? It is very unlikely. And it's unlikely because in many places deflation has already occurred and values have steadied. And while it is true that the markets that are rising are few and far between, which suburbs are these big reductions being calculated with? Which houses?

Places like south-east Queensland have certainly been hit hard and not seen increases for years. In prime inner city suburbs in Melbourne and Sydney, to claim that prices will plummet is nonsense - demand is so still so high, that its just not conducive behaviour for a price plunge."

Full story here.

Bidding at Auction Via Skype

"In early October, a potential bidder for a two-bedroom unit at Cathedral Place in Brisbane's Fortitude Valley requested to use Skype from Sydney to see the auction room and observe the atmosphere. The bidder, who had previously inspected the property, ended up buying the apartment under the hammer for $437,000.

While it was a first for Ray White's New Farm office, other agents have been using the web-based PTY Property, which provides an online bidding service that has also racked up recent sales including one of more than $3 million."

See:  The Australian

I guess this is better than phone bidding -- at least you can try to see if there are any dummy bids and see how many people are actually at the auction.

Call to build "pure hotels"

The AFR on Wednesday had a story quoting Simon Cooper from Marriott Hotels, saying that the Gold Coast needed more pure hotels and less strata titled apartment or condo style serviced apartment buildings.

"Building a condo is all about a high ratio of units to small public space and without that space you don't get the big groups of tourists.  ... they don't provide the benefits brought by the meetings and convention marketing, including the food and beverage offerings."

Take note of this warning if you intend to buy, rent, live or stay in an Oaks building in Brisbane.  It is not a hotel -- it is just a cheaply built apartment complex without hotel facilities, but being misleadingly marketed and sold as a hotel.  Not good for residents.  Not good for people thinking that they are booking a hotel.

Lend Lease Puts On Its Big Show

The headline of a story in the AFR on Thursday:  "Lend Lease Puts On Its Big Show", a story about the Brisbane RNA Showgrounds development, Show Ground Hill.  The first 43 apartments (The Green) will go on sale soon according to the AFR, with the developer using a $2 million sales suite and marketing shows in Sydney, Singapore, HK and KL to drive sales.  It is said to be a 15 year project, with 2000 dwellings, so I guess if you miss out on the first release, you will still have a chance to buy later on.

Prices for the first stage are reported to be $345,000 for a one bedroom apartment without parking to $665,000 for a two bedroom apartment.  This is a higher price than what you can buy today for a three to five year old apartment in a more central location.

CBRE says that "there was little demand for three-bedroom units in the market following a glut of high-end owner-occupier stock was built in the mid 2000s."

Off the plan sales data shows average price points have fallen 50% from the 2007 peak according to the AFR.  This means that cheaper, lower quality apartments are currently being marketed, not that prices for like-for-like apartments being sold off the plan have decreased.

CBRE says "Eventually it has the potential to become its own suburb."  This means that when first being built, there will be little infrastructure or amenity nearby for the initial residents.  In 15 years it may turn out ok, but that is a long time to wait, especially if the average hold period for an apartment is about 5 or 6 years.

CBRE also says:  "The Brisbane market is quite challenging at the moment, but my view is we are at the bottom of the market."

Misleading Conduct By Real Estate Agent

What a surprise.  A real estate agent in Melbourne has been found to have been engaged in illegal misleading practices involving negotiations after an auction.  The real estate agent told the bidder that someone else had made an offer at a certain price, when in fact that was not the case.  See The Age.

I am aware of situations in Queensland were real estate agents working for well known agencies and who are selling apartments engage in similar misleading conduct, even producing fake contracts.

This decision also reminds me of a case from New Zealand where the real estate agent sold the house to a regular "client", who then on sold the house for a profit.  The agent was found not to be acting in the best interest of the seller, and the bird-dog relationship with the buyer was something material that should have been disclosed to the seller.  See decision and article.

Mary Street Development

Demolition work has started on the 103 Mary St apartment hotel development.  It is located next door to the 111 Mary St "hole" that was to be the Vision building.

The 103 Mary Street development is 32 floors high, and will kill the views from the rear apartments in 212 Margaret St and in some of the Devine River City apartments.

In the photo below, 212 Margaret can be seen on the left and River City on the right.

Apartments Better Than Houses

A recent report from the Grattan Institute indicates a growing preference toward apartment-style accommodation in Australia.

The study, aptly entitled The Housing We'd Choose, found that Australians want more apartment-style housing and are moving away from detached housing.

It also found we’re not building enough of the type of accommodation more and more people want. ...

I’m concerned that there will be an oversupply of apartments in the Melbourne CBD and that this will create a severe price correction in that market, especially as many have been bought by investors. Some who won’t be able to settle their purchase and others who won’t be able to find tenants at a time when we have fewer overseas students coming to Australia.

An oversupply of CBD and new near city apartments is also looming in Brisbane.

But in general the high cost of land, council restrictions, the resistance of communities, high development costs and difficulty obtaining funding is stifling new apartment development in many of our inner- and middle-ring suburbs.

Then of course there are the infrastructure constraints to consider – namely public transport access and the capacity for existing roads and public facilities, such as schools and hospitals, to handle the type of rapid growth in resident numbers that higher density housing would create. ...

But as always, you can’t just buy any apartment and hope it makes a good investment.

I’d steer clear of generic, off-the-plan, and in particular, CBD stock. Inherently these lack scarcity and will be more risky in the next few years due to the glut of similar developments coming on line.

Extracted from "Why Apartments Are Better Investments Than Houses"

Price Growth Predicted for Brisbane

"There is solid price growth of 16% tipped for Brisbane" for housing by 2014, according to QBE.

Brisbane Sellers Overpricing For Sale Listings

"Brisbane listings require the highest level of reduction, with a typical 9.6% discount needed against the original asking price, according to Australian Property Monitors."

See Property Observer
So if 9.6% is typical, it means that some buyers are getting a buy price of more than 10% less than the list price.  Thus, in this market, should buyers be offering 25% less than the list price for an offer?

Buying Off The Plan

If you are buying an apartment off the plan in Queensland, whether in Brisbane or on the coast, you want to make sure that you buy the right apartment for you, at the right price.  At present, there are some great off the plan developments at reasonable prices, and there are others that are not so good or are overpriced. Why buying off the plan, get the right advice first.  Buy the ebook from Amazon Buying An Apartment Off The Plan in Queensland - A Guide For Successful Buying.

FKP Releases The Hudson at Albion Mill

Yesterday, FKP released the first stage of the Albion Mill development for sale, off the plan.  Apartments are for sale in the building called The Hudson.  There are 134 apartments in this building.  It is located near the Albion railway station.  The building is about 12 storeys, and looks very much like the El Dorado Village development.

Metro Property

Metro Property, owned by Pearls from India, David Devine and Ken Woodley (who lives in a Mirvac apartment), will soon launch The Plaza at South Brisbane.  It is a ten story building located on Manning Street, with 165 small apartments.

Metro have sold their 37 Mayne Road development in Bowen Hills.  The rumour is that it was sold to Arden Property Group.

In other news, there is a rumour that Devine/Leighton (no longer associated with David Devine) has sold its Camelot site on the corner of Albert Street and Margaret Street.

Invest in Brisbane

Shares or property?

• The Standard & Poor’s 500-stock index was off more than 14 percent for the quarter — and more than 10 percent for the year so far.
• The Dow ended the quarter down 12 percent and the Nasdaq lost 13 percent.
• ASX index of shares fell 13% in the September quarter; down over 15% for the year to date.

"The market has fallen over 15 per cent so far in 2011, putting it on course for the second sharpest annual fall in 2 decades and the heightened volatility has led strategists to take a cautious view -- despite historic low valuations."

Real estate investments are far less volatile than shares.

According to RP Data, Brisbane apartment prices increased 3% in the quarter ending August 2011 and prices are flat year to date.  RP Data believes Brisbane real estate is at the bottom of the market.  There is a significant price difference between Brisbane and the Southern capitals.  Rent yields are increasing.  It would appear that now is a good time to buy in Brisbane.

Before buying an investment property in Brisbane, read Investing in Brisbane Apartments - A Guide for Successful Investing.  You can read this ebook using a free Kindle Reading App, or you can buy a Kindle reader for use in Australia.