Buyers Retuning to the Market?

Real estate agents are reporting that buyers are coming back to the market in Brisbane, and that prices achieved are increasing.  For example, two bedroom apartments in higher quality city apartments that, at the height of the boom achieved above $800,000, and then dropped to the mid $600,000 range, are now selling in the $700,000 plus range, and sometimes more.  This includes a two bedroom apartment in Quay West, sold for about $700,000; a two bedroom in Admiralty Towers Two sold above $750,000 and a two bedroom in Saville at Southbank for more than $800,000.  In fact, another two bedroom at Saville is now listed for sale in the $900,000 range.

Investors appear to be returning to the market, due to lower interest rates.  Owner-occuppiers are looking for larger apartments, and there are not many high quality larger apartments available for sale (partly because developers have been focusing on building very small apartments that have been sold to foreign investors).  With interest rates low, many investors who currently own property are not selling, because these properties are now becoming positively geared -- why sell, unless the price offered is high?  There is a shortage of apartments for sale for owner-occuppiers; and a shortage of existing apartments (compared with off-the-plan apartments) for investors.

Towers like Infinity, aimed at Chinese investors, do not provide what local Brisbane buyers want in my view.

Photo of Infinity, under construction on the right.  Evolution Apartments is the smaller building in the middle of the photo.  The Supreme Court building is on the right in the foreground; the Magistrates Court building on the left in the foreground.  400 George St is the taller building on the left.

Valuer's View

From the HTW Month in Review, recently published:

"Our valuers are reporting anecdotally that confidence is reasonably good around south east Queensland, but job security is the big concern. It’s hard to pay your mortgage or rent without dollars coming in the door. Some certainty in the economy would be nice with a few observers saying a post-federal election surge is on the cards. We wouldn’t be so bold as to make that prediction, but politics and instability have played a hand in making the population uneasy on a number of fronts.

While there is some confidence in our markets,buyers are uncertain where fair market value lays in plenty of cases. There has been an increase in the number of pre-purchase valuations being requested by buyers. This is a sign to some degree that buyers want to purchase rather than just tire kick or hope to jag an absolute steal.

The sector seeing the best performance is probably the trade up market. Family size homes in the $1 million to $2 million range are being keenly sought. Buyers want large blocks and sizable homes.  Location is important too. Competition is toughest within 8 kilometres of the CBD, but this should come as no surprise. This sort of real estate is generally blue-chip and will offer the best chance of capital growth in the coming years.

So our call is that sectors where fundamentals are good are the ones that will perform the best in the foreseeable future. It’s no longer fair to say every sector is a buyers’ market. Our expectation for the rest of this year is one of quiet confidence. Assuming there are no unforeseen shocks, everything is pointing towards a steady-asshe-goes time in the market with modest gains to be made for those willing to buy and wait."

Brisbane Units Still Going Backwards

According to RP Data, Brisbane apartment values are still declining.  From an RP Data release:

"RP Data and Rismark International today released its July housing market results which shows that capital city dwelling values increased by 1.6 per cent over the month of July after posting a solid 1.9 per cent capital gain in June. These latest monthly results now takes the cumulative recovery to 6.5 per cent since dwelling values found their trough at the end of May last year.

The July results also take the rolling quarterly change in capital city dwelling values to +2.3 per cent over the three months ending July and values are 4.9 per cent higher over the past twelve months.

According to RP Data research director Tim Lawless, despite the strong headline, the market remains somewhat of a mixed bag.

“The housing market is being buoyed by very positive conditions in Sydney, Perth and to a lesser extent Melbourne, with residential values in these cities now 3.7 per cent, 4.4 per cent and 2.4 per cent respectively higher over the past three months alone. At the other end of the scale you have cities like Adelaide, Brisbane and more recently Darwin where conditions are more sedate with dwelling values slipping lower over the past quarter.” 

Brisbane apartment prices (to 31 July 2013):
July 2013 - down 0.5%

Quarter - down 3.5%
Year on Year - down 0.3%
Year to Date - down 0.7%
Median price based on settled sales of Brisbane apartments over the quarter - $373,500.

Off-the-plan apartments overpriced

A story in the Courier Mail yesterday:  "Bank revaluations hit apartment buyers".  Some extracts:

• Buyers of off-the-plan apartments are reporting that banks are revaluing their properties once the buildings are completed and only lending a lesser amount.
• "The difference between the price paid by a property buyer and the bank valuation is often high, over 20%, and the differential is spreading.  Many off-the-plan purchases are made at prices significantly above true market price.  On completion, it is not uncommon for valuations to come in at least 10 to 15% below the contract price." said Michael Yardney.
• The problem arises in two ways:  the buyer initially pays too much and the property declines in value during the construction period.
• "As a general rule, off-the-plan will go down in value as soon as it's built." said Mr Roylance, director of iProperty Plan.
• In this situation, the lender will usually provide a loan at 80% of the valuation, not 80% of the contract price.

Chinese Buyers & Infinity

The AFR had a story on 24 July:  "Brisbane keen for more Chinese buyers".  Some extracts:

• Harry Triguboff from Meriton apartments expects Brisbane to be next in line for an influx of Chines investors, but says it will depend on the growth in education in Brisbane.
• Chinese buyers in Brisbane were few and far between, when compared with Sydney and Melbourne.
• Infinity Tower, by Merition, has sold about 200 apartments according to Urbis. 
• In the first quarter, only seven apartments were sold in Infinity, for an average price of $560,714.
• Meriton has no additional plans for apartments for Brisbane.  "I want the Brisbane market to get stronger first."

Fat Australia

It is even making new in New York that Australians are getting fatter.  In New York, many people live in apartments, and do a lot of walking.  In Brisbane, many people who live in apartments still drive everywhere.  One reason for this -- there are often less facilities within walking distance.  The government thinks that high density living is good, but only thinks about the place to sleep.  In NY, it is easy to walk to schools, playgrounds, kindergartens, swimming pools, and everyday stores (such as chemists, bakers, barbers) from your apartment.  This is often not the case in Brisbane.

Outlook for Property on a Weaker Dollar

The AFR had a story on Wednesday titled "Outlook for property on a weaker dollar."

An abstract from ABIX is as follows:

"While it is pointless trying to accurately forecast the future changes in the Australian dollar's value after a decline of about a tenth during the six months to July 2013, it is worth considering the effects this has on real estate investors. Those with existing overseas assets are seeing a boost to the income streams, while those only now starting to allocate funds to the segment will have to pay more. Foreign investors looking to buy off-the-plan properties in Australia, the only option available to them, will find this easier to finance and demand should increase. However these investors account for only 3% of the market. Meanwhile local real estate buyers may feel the impact of inflation, but in general the fallout from the foreign exchange rate fluctuations will be moderate."

Some quotes from the article:

"A lower Australian dollar may increase the attraction of Australian property to overseas investors - particularly new or off-the-plan property, given that FIRB rules exclude non-residents from buying established property."

"The reality is that inward investment flows into Australian residential property are modest, and represent a very small proportion of the total market.   According to FITB, in 2011-12, around $15.5billion was invested in off-the-plan developments, either by overseas buyers or by development companies marketing to overseas buyers.  Compare this to the $500 billion in mortgage financing for property purchases recorded by the ABS in the year to November 2012 -- overseas buyers represent just 3% of the residential property market.   The most significant issue for property investors emanating from a weaker dollar is the potential flow-on for inflation and mortgage rates.

"Unless there is a precipitous decline in the Australian dollar, there is little to worry local property investors.  But large declines do happen from time to time."

Population Growth

Population growth and employment drives house price growth.  Population decreases and unemployment causes property prices to fall.  The following statistics are relevant.

SouthPoint

After delays and false starts, it now appears that SouthPoint at SouthBank is ready for a sales launch.  See this site and this site, for example.  The development is on Grey Street, opposite the Galleria and next to the train line, on what has been called the Collins Place site.

According to sales agents, the SouthPoint building has three sections, arranged vertically.  The central section will be an Emporium Hotel, with residential apartment sections on either side (called the North and South cores).  On the rooftop will be a 25m wet edge infinity pool, a day spa with massage rooms, hairdressing and manicure options, a roof top bar and gymnasium.

From what I have been told, in the South core, the one bedroom apartments range from $425,000 with a Southern aspect and no car parking, to $560,000 for the top level facing the river with a car park.  The one bedroom apartments are all less than 60 sqm in size.  Two bedroom apartments in the South core start at $645,000 for a lower level rear apartment facing the railway line to around $840,000 for the top level river and city view apartment.  These two bedroom apartments are all less than 80 sqm internal size, so are much smaller than similar apartments in Saville (Mantra) SouthBank.  Compare also apartments in Quay West, where one bedroom one car apartments are about 73 sqm, and sell for about $450,000 with river views and furniture.

In the North core, there are three bedroom apartments that range between $1.7million and $3.8 million. These appear to be large apartments.

Apartments on the rear of the building face West, looking over the train line.  There are surrounding buildings, so to get a good view, you will want to be on a higher floor.

This development is by Anthony John Group, who is doing lower priced apartments in Cannon Hill.  Their apartments in the Valley Emporium development were not, in my opinion, high quality apartments.  It seems that SouthPoint will have three levels of finishes, so care must be taken to ensure that you understand what level of finish will apply to each apartment.

Festival Towers lawsuit

Many owners of apartments in Festival Towers in Brisbane, and the body corporate, are suing Devine Limited and Brookfield Multiplex Constructions for a large amount of damages concerning the construction (and alleged construction defects) in Festival Towers.  Details of the lawsuit can be found here on the Supreme Court website.  I have been told that there have been special body corporate levies to partially fund the lawsuit.

Any prospective purchaser should have their lawyers study the lawsuit paperwork, including the schedule of defects, in detail.

At the time of development and construction of Festival Towers, Devine Limited was run by David Devine, with Ken Woodley as the senior person on the sales side.  Devine and Woodley are now running Metro Property Group, which is a marvellous sales machine.

Festival Towers, managed by Oaks, doesn't have the greatest feeling in my view.  Partly short term accommodation and partly foreign students (packed into small apartments, and sleeping in hallways and living rooms), and a popular place for travelling hookers, Festival Towers has always disappointed me.

In my opinion, purchasing apartments off-the-plan has risks, because you don't know the level of quality that will actually be delivered.  The sales contract is most often in the developer's favour.  In a number of circumstances, I have seen glossy brochures inferring high quality, but the product that is delivered is low quality.  For this reason, I always take that view that off-the-plan pricing should be less than current market pricing to take into account this risk.  Unfortunately, most developers are selling apartments off-the-plan at prices that are higher than you could buy an existing similar apartment -- the only difference being age.

An agent I spoke to recently who was selling off-the-plan informed me that his competition was not other new developments, but resale apartments in recently finished buildings by the same developer.  He said the price of the resale apartments was about 15% less than his almost identical new, under construction apartments.  And buying an existing apartment is way less risky than purchasing off-the-plan.

Recent Apartment Sales in Downtown Brisbane

Evolution
  Apt 171, 1 bed, 1 bath, no car - $310,000
Grosvenor
  Apt 107 - $1.3M
Skyline
  Apt 61, 3 bed, 2 bath, 1 car - $715,000
  Apt 94, 3 bed, 2 bath, 1 car - $790,000
  Apt 363, 2 bed, 2 bath, 1 car - $587,500
Charlotte Towers
  Apt 3206, 1 bed, 1 bath, no car - $335,000
  Apt 3508, 1 bed, 1 bath, no car - $317,000
  Apt 4009, 1, bed, 1 bath, no car - $347,000
Metro 21
  Apt 3001, 2 bed, 2 bath - $553,500
Quay West
  Apt 129, 3 bed, 3 car - $1M
Riverplace
  Apt 304, 3 bed, 2 bath, 1 car - $1M
  Apt 272, 2 bed, 2 bath, 1 car - $675,000
  2 bed, 2 bath - $527,000
Festival Towers
  2 bed, 2 bath, 1 car - $457,500
  Apt 1906, 1 bed, 1 bath, 1 car - $309,000
Admiralty Quays
  Apt 78, 3 bed, 2 bath, 2 car - $920,000
  Apt 76, 1 bed, 1 bath, 1 car - $550,000
  Apt 46, 2 bed, 2 bath, 1 car - $780,000

Brisbane Property Prices Flat in FY12/13

Over the 2012/13 financial year, Brisbane had a 0.6% increase in property values, according to RP Data.  This is less than inflation.   And below the Australian capitals average.  Not a good result, but better than going backwards.

LA property prices in dramatic increase

I was recently looking a property in the LA area of California.  When a house I was looking at was listed for sale, about 20 written offers were received.  I was amazed.
Recent stories in the LA Times state that there is a property boom (or property undersupply) in parts of LA.
See:  Low Inventory and 28% Increase.
There was also a jump in the median sales price in San Francisco.

Brisbane Underperforms

Brisbane has been the worst performing city in Australia when it comes to capital gains for housing, looking over the last 5 years.  In fact, there have been, on average capital losses for the past 5 years.

Looking back 10 years, rather than 5 years, things look a little better.  But people who have purchased in Brisbane the last 6 years are doing badly today.

South side apartment developments

I received an email from an agent selling apartments off-the-plan, listing four current projects.  Here are the details that were sent to me.

Fish Lane Apartments

-          48 Apartments at corner of Melbourne and Cordelia Street, South Brisbane;

-          Brisbane State High School catchment area

-          Currently under construction (completion to 5^th floor) and expected settlement on December 2013.

-          Bosch appliance (gas cooktop, microwave, oven, dishwasher) and dryer inclusive

-          One bedroom apartments with car – sold out

-          Two bedrooms two bath one car apartments North East city view facing Level 5 from $595,000

Edge Apartments 

-          48 Apartments at Manning Street, South Brisbane

-          Brisbane State High School catchment area

-          Currently complete demolishment and expected settlement late 2014

-          Bosch appliance (gas cooktop, microwave, oven, dishwasher) and dryer inclusive

-          One bedroom apartment with car – sold out

-          Two bedroom two bath one car apartment South-West facing Level 1 and 2 from $555,000

-          Current promotion with $25,000 cash back at settlement or $10,000 cash back and full furniture pack

Arena Apartments 

-          191 Apartments at Edmonstone Street, South Brisbane

-          Brisbane State High School catchment area

-          Currently commence construction, expected settlement Dec 2014 to Feb 2015

-          Bosch appliance (gas cooktop, oven, dishwasher) and dryer inclusive

-          One bedroom apartment with car - $390,000 Only two left

-          Two bedroom one bath one car - $520,000 at Level 5

-          Two bedroom two bath two cars with 86m2 internal and 45m2 court yard - $645,000 at Podium Level

-          Three bedroom full upgrade Skyhomes with three cars - $1.45m, $1.7m and $1.75m three available

Glass Factory

-          47 Apartments at Vulture Street, West End

-          Brisbane State High School catchment area

-          VIP Launching on 7^th September

-          One bedroom with car from $370,000

-          Two bedroom two bathroom with car from $555,000

-          Three bedroom two bath two car with city view at high levels from $825,000 

Auctions Not Popular in Brisbane

In Melbourne, many properties are sold by auction.  In Brisbane, less properties go to auction, and auctions are less successful.  I find it interesting that some agents really push vendors to have auctions -- often leading to unhappy vendors.

See RP Data report

A soaring apartment market in Toronto ignites fears of a crash

An interesting recent article in the NY Times about apartments in Toronto: A Dizzying Condo Market in Toronto.  How similar is this to Brisbane?  An extract:

"Median condo prices have risen 25 percent since 2009. Two-bedroom condos of about 850 to 900 square feet in Liberty Village sell for about $500,000.  For Toronto, this is crazy.

“There is no question that the housing market in Canada is overshooting,” said Benjamin Tal, deputy chief economist of CIBC World Markets. “Now the cocktail party conversation in Canada is: ‘Will this lead to a U.S. style crash?"

Will Brisbane Apartment prices go up or down?

Brisbane apartment prices did worse that Brisbane house prices over the past financial year.  There was a fall of 1.8% in Brisbane apartment prices in 2012/13.  The number of apartment sales are 13% low than 12 months ago.  This does not sound like a booming or healthy real estate market.  Some predict that apartment prices will slowly deflate, year on year, for a number of years to come.  Others predict that with low interest rates and good population growth, then prices will start to increase.  RP Data says that Brisbane will be flat for the next year.  If that is the case, no rush to buy or to sell.  Not good news for real estate agents, who rely on sales volumes to make a living.

Postcode 4000

Source:  RP Data: Brisbane City and Spring Hill Postcode 4000

Leaving Brisbane

Many young adults live in apartments in Brisbane.  But many want to leave.  Brisbane is expensive, and is not yet a first tier city.  I like Campbell Newman's new motto for Brisbane that sums things up:  "Brisbane -- It could be worse!"  As recently reported in England:

"But the Queensland capital’s younger residents are voting with their feet, seemingly unconvinced it is worthy of global renown."  See The Guardian

Risks of Investing in Mining Towns

An article from the AFR on Thursday, 13 June 2013 is a good reminder why investing in boom towns is more like gambling than investing:

Boom town burns investors:  John Briggs of Port Hedland Real Estate predicts tough times ahead. 'Sales are few and far between.  Anybody who invested in the last 18 months is in for a torrid time.'  A banking source said lenders require potential buyers to have about 50% equity to buy into the former mining hot spot.  'Anyone looking to buy into towns like Port Hedland is buying at the wrong end of the market cycle,' said Gavin Hegney, a valuer.

Capital City Home Values

Capital city home values are up or down, depending on which RP Data chart you look at.

I bet no real estate agent in Brisbane will be distributing this RP Data chart.  Brisbane is more than 10% below the most recent peak, and has been a poor property performer.

Only Two Dollars!

This apartment looks like a bargain!  Only $2 for 5 bedrooms.

Fire at Cathedral Place

There was a fire this afternoon in an apartment on the top floor of Cathedral Place.  This building is located on the edge of Brisbane City, in the Valley. The building was developed by Devine, under the control of David Devine, now of Metro Property Group.

See http://www.abc.net.au/news/2013-06-09/residents-trapped-in-inner-brisbane-apartment-building-blaze/4742780 and Sun Herald

In my opinion, this is a very poor quality building, with small apartments, surrounded by main roads.  I would always be extremely careful before buying or renting any apartment that was built by Devine.

Some apartments for sale in Cathedral Place:  Apt 107, Apt 21, a one bedroom.

Skyview Apartments at Kelvin Grove

Pradella is marketing SkyView apartments at Kelvin Grove.  These are part of the Urban Edge development.  The other two buildings on this site have been completed.  SkyView is currently in the early stages of construction.

The building is 14 levels.  There are 174 apartments.  Of these, 100 have one bedroom; 60 have two bedrooms and 14 have three bedrooms.

As at late May 2013, about 20 apartments had sold.

Prices range as follows:

• One bedrooms -- $326,000 to $484,000
• Two bedrooms - $506,000 to $705,000
• Three bedrooms - $789,000 to $889,000

Examples of apartments for sale:

• Apt 31010, level 10, 1 bedroom, bedroom at rear of apartment with no views, 51 sqm internal, 70 sqm total - $466,000
• Apt 30709, level 7, 2 bed, 2 bath, second bedroom at rear with no views, 81 sqm internal, 103 sqm total - $654,000
• Apt 30501, level 5, 3 bed, 2 bath, 114 sqm internal, 137 sqm total - $829,000

These apartments seem to be larger than many of the other apartments being sold by developers at present.  They also seem to me to be expensive.  The location is good.  The views will be great from the higher floors.  The design of building is only one apartment wide, so that airflow can go from the front of the apartment to the back.  Again, it seems that Pradella is putting air conditioning compressors on the balconies, which I do not like.  The living room is narrow -- 3.6m in some two bedroom apartments -- my rule of thumb is that the living room should be 4m wide and 6 m deep a minimum.  Here, the size is 3.6 m wide and 4m deep.

Urban Edge Apartments at Kelvin Grove

Pradella has completed two of the three buildings in its Urban Edge complex at Kelvin Grove.  The "Horizons" building recently completed, and residents have moved in.  The Skyview building, the third of the buildings on the site, is in early stages of construction.

Horizons is an 11 storey development, with about 133 apartments.  As at late May 2013, about 40 apartments were available for sale.  The majority of these apartments are on the Ramsgate Street side, facing west, and not with city views.  I counted 20 one bedroom apartments available for sale on this side of the building.

Some example apartments that remain for sale:

• Apt 20808, level 8, 1 bedroom, 52 sqm internal, 66 sqm total, $429,000
• Apt 20506, level 5, 2 bedrooms, 2 baths, 72 sqm internal, 85 sqm total, $550,000
• Apt 21105, level 11, 2 bedrooms, 2 baths, 76 sqm internal, 91 sqm total, $584,000
• See also REA listings

These apartments appear to be of good quality construction.  However, I don't like high-rise where the air-conditioning compressor is located on the balcony and where there are aircon headends on the walls.  For a number of apartments, the kitchen is just a row of benches on the wall, and the dining area is in this kitchen space.  (That is, no separate room or even an island bench-top for the kitchen.)  Some of the bedrooms have very small windows.

Top End Apartments

Some high end apartments for sale in Brisbane:

• The Refinery at New Farm, 4 bedrooms for $3.65M
• Pinnacle at Roma Street Parklands, 3 bedrooms, 291 sqm, auction
• Pinnacle at Roma Street Parklands, 3 bedrooms, 229 sqm, auction
• Hamilton Harbour, 2 bedrooms plus media room, auction
• The Grosvenor, 3 bedrooms, about $1.4M
• Riparian, 3 bedrooms, $7M.

TDD Peninsula at Kangaroo Point

Peninsula at Kangaroo Point is currently being marketed by TDD.  One bedroom plus study from $370,000; two bedrooms from $425,000 to $620,000.  Video here, that doesn't really say much.  This is being marketed as a "riverside" development.  Take care -- this is not a riverfront development.  In fact, it is much closer to the highway that goes across the Storey Bridge and the exit to the Clem7 tunnel than it is to the river.  See map here.

Matusik touts 38 High Street development

An interesting video regarding the 38 High Street apartment development in Toowong, next door to the RE pub.  Look here.  One bedroom apartments from $339,000.

FKP's Albion Project

FKP is promoting its The Hudson at Albion Hill project.  See www.themillalbion.com.au.

Quote from Courier Mail advertorial, 8 June 2013 from FKP's general manager of developments:

"Overwhelmingly pivotal in all deals has been the size of apartments...  This difference is real, it matters and its definitely a deal-maker.  People want space in an apartment."

The advertorial highlights a 2 bedroom, 1 bathroom apartment that is 67 sqm.  In my view, a 67 sqm two-bedroom apartment does not have space!  This is a tiny apartment.  One of these apartments is advertised at $399,000.

BOQ warns about one bedroom apartments

"Bank of Queensland is worried about a surge in people borrowing money to invest in small apartments, citing Brisbane and Melbourne as concerning spots.

Of particular concern was self-managed super funds (SMSF) engaging in the tactic, BOQ CEO Stuart Grimshaw said.  He said the assumption was these one-bedroom apartments would appreciate in value, but it was  a "risky part of the market" for heavily borrowed SMSF funds.

"I don't think it's long before ASIC will start looking at some of the sales methodology," he said."

Source:  Courier Mail, page 77, 8 June 2013.

Be warned!

Ryder says Brisbane apartment market is heating up

A commentator named Terry Ryder says that the Brisbane apartment market heats up.  See story on Property Observer website.  However, take care reading this.  The article is based primarily of sales of new and off-the-plan apartments.  What is not stated is that these sales often made to foreign investors, who cannot purchase existing apartments due to FIRB rules.  When looking at resales of existing (i.e., not new) apartments, the story is different.  For example, the REIQ report, mentioned in a post yesterday, shows that less than 1 apartment per day sold in the March 2013 quarter in downtown Brisbane.

Ryder also says that consumers (I suspect he means foreign investors) have a preference for 1 bedroom apartments over 2 bedroom apartments.  My guess is that this is because new two bedroom apartments being sold by developers are overpriced.

Brisbane Property Prices

RP Data reports that Brisbane property prices are increasing, but looking back five years, the annual change in capital values is still negative.  That means, on average, a person who purchased five years ago has made a capital loss in Brisbane.

Property Sales in Brisbane

RP Data reports that the number of sales of houses and apartments in Brisbane is more than 15% below the rolling five year average.  The number of sales is slowing increasing.

HTW Valuer's Month in Review Report

HTW Property Valuers say in their recent monthly report that, for apartments, the Brisbane market is improving, the Gold Coast market is declining, and the Sunshine Coast market has bottomed out.

[Click chart to view]

REIQ reports that apartment demand is increasing

Sales of units and townhouses across Queensland have strengthened further over the last year, according to the latest Real Estate Institute of Queensland (REIQ) data report.  Over the March quarter, the preliminary numbers of unit sales in Queensland increased by 2 per cent compared to the same period last year.

But it is sales in our major tourism centres of Cairns and the Gold and Sunshine coasts that are the real story with sales sky-rocketing over the past year in these areas.

“The popularity of units and townhouses in our major tourist precincts has returned,” REIQ CEO Anton Kardash said.  “These areas have experienced the highs and lows of the GFC, and the strength of the Aussie dollar, more than most over the past four years so it is heartening to see them stepping back into the light.  Many of these areas have also become more affordable, even those with unique seaside locations, so this is no doubt spurring buyers into action before the tide has turned to the positive completely.” 

In Brisbane, the median unit price was steady at $390,000 over the March quarter. Solid performers over the period were Upper Mount Gravatt and Kelvin Grove which posted price growth of 9.6 per cent and 8.8 per cent respectively. 

[Click on chart to enlarge]

A Declining Market

For the month of May, dwelling values declined by -1.2 per cent across the RP Data-Rismark combined capital city index. The May fall was the second consecutive month-on-month decline, with values down -0.5 per cent in April following a 2.8 per cent rise in values over the first quarter of the year.

"Given the weak housing markets of 2011 and 2012 were followed by a very robust 2013 first quarter, we may well be seeing some natural market volatility associated with vendors acquiescing and taking the opportunity to sell."

Brisbane apartment prices (to 31 May 2013):

May 2013 - down 1.7%

Quarter - down 0.4%
Year on Year - up 1.5%
Year to Date - up 1.1%

Median price based on settled sales of Brisbane apartments over the quarter - $375,000.

With a number of businesses in Brisbane continuing to make employees redundant, or implementing a wage and hiring freeze, it is hard to see things getting better in Brisbane any time soon.

Pet Disputes

It is becoming common for owners to seek permission to have a pet, for the body corporate committee to refuse, and for the body corporate committee to be overruled.  See recent cases:

• Cat allowed in Eden by the Bay
• Cat allowed in Horton Apartments
• Decision not to allow dog by body corporate suspended for further review
• Dog allowed and bylaw prohibiting animals struck out

Car Spaces

According to Matusik in the Courier Mail today:  "The premium for a car space within a new inner Brisbane development ranges in prince depending on the location, but the average cost is close to $75,000."  He said that apartments without carparks are harder to sell.

Brisbane Rental Report

Brisbane Letting Agent RBCX has issued the following rental report for Brisbane City and inner Brisbane:

"The CBD market seems to be like no other.  Apart from short periods here and there, the demand for rental properties in the CBD is very strong.  There may not be the 20+ attendees at every ‘Open Inspection’, but there are generally eight to 10 interested parties.

The rental demand is strong for units up to $800 per week – and this includes furnished units.  Above that level, the market shrinks significantly and vacancy periods can be three to four weeks+, unless the property is new and/or modern, with fixtures, fittings and décor to match. River and City views are essential.

The CBD buildings that experience less demand are those that offer short-term letting, as well as long- term residential. These buildings can be very noisy with a pervasive party atmosphere.

The Inner-City market is not faring as well as the CBD market.

In the last quarter of 2012, the rental market tightened markedly with the first signs of the downturn in the Resources Sector. There has been further erosion to rents in 2013.  There are many reasons why the rental market is flat and rents have contracted: the gradual 2012 exodus of Corporate tenants, who were the bread-and-butter of Inner-City rentals, gained momentum. In some areas, they have almost disappeared from the rental landscape; the announcement of the Federal election almost six months out from 14 September 2013 has seen many businesses go into semi-hibernation; job shedding in the Public Service market; the fallout from a Resources Sector seemingly in increasing decline; job insecurity; rising unemployment due to a flat economy; and loss of consumer confidence.

Also, many people who were Inner-City tenants have moved to the suburbs. They are prepared to sacrifice proximity to the city for more affordable rents. This trend is increasing with properties, particularly houses within 10 kms of the CBD being in heavy demand.

Our experience is the Inner-city renter wants everything within walking distance: transport, shopping, entertainment. They do not want to have to drive to services, facilities, infrastructure and entertainment precincts.  There is also a great deal more competition from new developments in the Inner-City areas, including Kangaroo Point, Teneriffe and New Farm. New building stock with all the aforementioned criteria is offered at rents below those of older, established buildings. New buildings with trendy, contemporary interiors and more attractive rents are appealing to the sought-after Corporate market, as well as private renters."

Buyer's Market says RP Data

"The survey was conducted across 1,030 respondents who were located across the capital city and ‘rest of state’ regions around the country.  The headline findings showed 80% of Australians think it’s a good time to buy a home but only 37% think it’s a good time to sell.  The results suggest, at least from a consumer perspective, that housing remains a buyers market."

See RP Data Blog

"There has been clear evidence of weaker housing market conditions over the second quarter of 2013. The housing market is highly seasonal and we anticipated a slowing of conditions over the current period however, it is likely that the magnitude of the slowdown and subsequent value falls has been heightened by falling consumer sentiment. Should this continue, it is reasonable to anticipate a less active housing market where value growth is lower than when confidence was much more buoyant."

See RP Data Report

U.S. Home Prices Rise

The U.S. is in a more positive mood.  See NY Times:

"Americans are in a buying mood, thanks largely to the housing recovery.  The latest sign emerged Tuesday as the Standard & Poor’s Case-Shiller home price index posted the biggest gains in seven years. Housing prices rose in every one of the 20 cities tracked, continuing a trend that began three months ago. Similar strength has appeared in new and existing home sales and in building permits, as rising home prices are encouraging construction firms to accelerate building and hiring."

Vida West End

PointCorp is developing an apartment complex at 101 Riverside Drive, West End.  This is next door to Pradella's Left Bank development, and near to Pradella's Tempo development.

This new development is being marketed as Vida.  It consists of two towers of about 10 floors each, with about 150 apartments.  Some apartments will look West across the river.  About half the apartments will look East towards West End.

The Courier Mail says that for the apartments on the riverside, 1 bedrooms will be from $460,000; 2 bedrooms from $660,000; and three bedrooms from $1.2 million.  It will be interesting to see how expensive the apartments on the higher floors will be.

Compare a recent listing in Left Bank next door -- two bedrooms on a lower floor with river views for $599,000.

Darkness on Alice Street

Sunland has obtained development approval for its apartment tower at 140 Alice Street, on the corner of Albert Street.  Recently, barricades went up around the existing unit block.  I suspect that demolition will start soon.

It appears that this skyscraper will contain 139 luxury apartments and will tower over and shade the Botanical Gardens.

"With apartments priced between $700,000 and $4 million, there would be a pool, gym, a 24-hour concierge for tenants, business centre and a Turkish hammam."

Sunland has branded this complex as Abian Apartments.  Have fun when dealing with Sunland:

"The Victorian Supreme Court dismissed Sunland's claims in June 2012 because their key witness was deemed untrustworthy."  Sun Herald