NY Short Term Rentals Law

Oaks Group should be happy that they don't do business in NY. A recently enacted law prevents short term rentals of apartments. That seems like a good idea to me. Apart from fire and safety issues, if you buy to live in an apartment building, it is not much fun having people stay next door thinking it is a hotel.

See NY Times story, A Place for Short-Timers to Park.

One or Two Bedrooms?

I am often asked by potential property investors is it better, all things being equal, to purchase a one bedroom or two bedroom apartment? There is no absolute answer to this, but my preference is for two bedroom apartments.

The main reason is that there are more likely buyers for two bedroom apartments. A one bedroom apartment is good for a divorced father, a widow, a rich foreign student or a lonely yuppie. A two bedroom apartment is better for a newly married couple, a young family, a divorced mother with children or a retired couple.

When it comes to renting, a good two bedroom apartment often rents faster. One reason is that if the apartment is well designed, it rents to single younger people who share.

Consider the maths. A one bedroom apartment rents for $400. In the same complex, a two bedroom two bathroom apartment rents for $520. So if two people share the rent, they only pay $260 each.

It is important to focus on a good layout for a two bedroom.

• It should have two bathrooms. If it only has one bathroom, it is not so good to share. Often, a two bed one bath apartment is really a one bed plus study apartment.
• The second bedroom should be near the bathroom. It is not good if you have to walk through the living room to get to the bathroom.
• The bedrooms should be separated and have privacy.
• Both bedrooms should have external windows. A window onto a hallway does not count.
• Ideally, both bedrooms should be a reasonable size. Anything less than 3.2m x 3.1m for a bedroom (not including the wardrobe) is too small in my view. It is best if the smallest room is no less than 3.4m x 3.2 m. The main bedroom should have a wall that is at least 4m.
• There should be room for a desk in both bedrooms.

Also, some one bedrooms are left-overs -- an apartment that could have been a two bedroom apartment, except that the developer need room for a lift or fire escape, so the second bedroom disappeared.

Below is an example of a good two bedroom design. The apartment is 92 sqm internal, plus balcony. Both bedrooms are more than 12 sqm each.

Here is an example of a bad two bedroom design. Although the bedrooms are separated, look where the second bathroom is located.

Additionally, on a price per sqm basis, a one bedroom apartment is often more expensive than a two bedroom apartment in the same complex. That premium is not worth it.

Off-the-plan apartment risks

I have previously written about the risks of purchasing off the plan apartments. See this post for example. Others have also written about these risks. See this article for example.

The May edition of Australian Property Investor had a good story about the oversupply of inner city Melbourne high rise, which is also worth reading. See "High on High-rise". One point made is that many of the apartment buildings planned for Melbourne are aimed at being sold to investors, not owner occupiers. This is resulting in the wrong type of apartments being built and the article predicts that these apartments will not grown in value.

A similar issue is revealed in a story in The Australian today regarding Meriton apartments. Meriton is currently building two very tall high rise apartment buildings in Brisbane, Soleil and Infinity. Meriton reports that sales have mostly been to Chinese investors, who have stopped buying. Meriton says that it is Chinese investors who purchase most of the off-the-plan apartments in Australia. There is a clear risk in buying an apartment as an investment in such circumstances. As I have previously written, it is best to buy in a building where there are a large percentage of owner-occupiers in the building.

"Mr Triguboff said prices in the overheated Chinese property market were starting to fall, while the Australian dollar continued its stellar run, making Australian property increasingly expensive compared with China.

"Our (real estate) market is the Chinese market, just like coal and iron ore," Mr Triguboff said.

"We need lower interest rates so that our dollar drops and it stimulates growth."

Mr Triguboff, whose Meriton Apartments builds more than 1000 units a year, said Chinese owners and investors had accounted for about 75 per cent of Meriton sales for the last two to three years.

But in the past month, numbers had fallen steeply. ..."

Apartment Prices Level with Houses

Terry Ryder published an opinion piece in The Australian today. Some extracts:

"THE planets are falling into alignment for property investors at present. We not only have a buyers' market in many key locations, but the scenario for rents and yields looks positive.

Two reports from credible research sources record a revival in rental growth in most of our major cities and predict solid rises throughout the year. "Renters should prepare for significant growth in rental prices throughout 2011, driven by accelerating economic activity, housing shortages and a depressed first-home buyer market," said APM's senior economist Andrew Wilson. Units in particular have seen a major shift in demand, with low vacancy rates for inner-city residences in most capital cities intensifying competition.

It has long been a basic tenet that houses show better capital growth than apartments, but changing lifestyle choices and affordability issues mean more households are opting to live in attached dwellings.

Last year, units showed slightly better capital growth than houses in terms of average growth across the nation, according to RP Data figures. ...

The 4 per cent average growth for dwelling rents recorded by Matusik Property Insights in the past year is very moderate - about half the historic annual rise in rents - and inconsistent with notions of a chronic dwelling shortage (as claimed by the developer lobby).

Matusik says vacancy rates drive rental growth and a general increase in vacancy rates in 2009 and much of last year caused rental growth to stall. Rental growth is now starting to return, he says, with a recent drop in vacancies.

"A falling vacancy rate is likely to put further pressure on weekly rents," Matusik says. "Rises of between 5 and 8 per cent during calendar 2011 are not out of the question.

"This in turn should lead to an increase in property values."

The Queensland Rental Market

Extract from REIQ press release:

'Queensland’s residential rental market has absorbed the impacts from this year’s natural disasters however demand is starting to tighten in some areas due to lower buyer activity, according to the Real Estate Institute of Queensland (REIQ). The REIQ’s March residential rental survey has found vacancy rates have continued to tighten over the past six months as more and more buyers stay on the sidelines.

“The floods did have a temporary impact on the rental market, but the REIQ rental survey has found this was mainly confined to flood-affected areas,” REIQ chairman Pamela Bennett said.

“However, the rental market is starting to be affected by the subdued property market given the low number of first home buyers and investors’ means there is more demand and less supply in the rental market. This also occurred in 2008 when high interest rates deterred buyers so it is not difficult to ascertain that the current economic conditions and the rapid nature of rate rises last year are having the same effect this year.”

The REIQ March rental survey, as well as statistics released by the Residential Tenancies Authority (RTA), have shown that the Brisbane rental market, while tighter, is not as dire as many anticipated.

The rental survey found vacancy rates for the Brisbane City local government area tightened in March, coming in at 1.8 per cent, down from 2.6 per cent in September last year.

RTA statistics for the start of this year largely illustrate drops in bonds lodged in suburbs directly affected by the floods, while January in general was a quieter month across the Brisbane area as many renters chose to stay put following the floods.

While median weekly rents were up significantly in some flood-affected Brisbane suburbs during January, Brisbane as a whole recorded steady rents and a drop in the total number of bonds lodged for the month.

“With reduced rental accommodation in their immediate area, many tenants and homeowners displaced by the floods had to look to other suburbs for accommodation in January and February,” Ms Bennett said. “However, REIQ agents in unaffected suburbs reported that this did not result in any significant increase in rental demand in their local areas.”

RTA statistics show that demand for three and four-bedroom houses increased following the floods, while the two-bedroom unit rental market remained relatively stable. In general, REIQ agents are now reporting that the rental market has begun to return to normal conditions.'

See also The Australian

Migration to Queensland

Bernard Salt from KPMG has a very interesting article in The Australian today. It says that interstate migration to Queensland is slowing. But this decline has been offset by international migration to Queensland and a higher birth rate. According to Salt, this means that the rental market will be good but the residential sales market will be adversely impacted in the short term. An extract:

"This time around, super is looking sick and older workers believe there's better value in working longer. The upshot is a diminution in interstate migration outflows and inflows.

This has affected the demand for property in states such as Queensland and Western Australia, where the economy and property industry have been geared around interstate-migration-supported growth. Take away interstate migration and these states are impacted, Western Australia less so than Queensland because of the mining boom.

But how long will this trend last? The answer is both simple and complex.

The slowdown in interstate migration to Queensland will last for as long as people have diminished confidence in their ability to achieve the shift. There needs to be time and positive consumer and workplace sentiment between the GFC and the recovery.

I'd suggest that, all else being equal, that timeframe would be three to four years, which means that recovery might not arrive until mid next year. But "demographic recovery" for Queensland could also be tempered by the floods and Cyclone Yasi as well as by further changes in policy settings coming out of Canberra.

And then there is the issue of negative media sentiment, which will continue for as long as the ABS reports show demographic decline."

Full story here. It is worth reading.

Devine and Leightons

David Devine, who founded the Devine development company, no longer owns part of it. He sold out as part of a legal dispute involving a long time personal assistant. Devine developed lower quality high rise apartments, primarily sold to offshore and interstate investors. David Devine has established Metro Property Group, and is back in business building large highrise buildings with small apartments in B-grade locations. David Devine, and his marketing manager Ken Woodley (also ex-Devine) both live in very large apartments not built by Devine.

David Devine recently has been critical Leightons who owns 49% of Devine. Extract from The Australian:

"In February 2007, Leighton paid $94.7m for a 40 per cent stake in Devine but the two groups fell out during the GFC.

"At Devine, they weren't interested in the fundamentals of the business. They just thought you do it and it happens," Mr Devine said. "I have a lot of respect for Wal King but I can't say the same for the other Leighton representatives on the Devine board while I was there."

A Leighton spokesman said Mr Devine's comments were no longer relevant to Leighton and its investment in Devine.

"Mr Devine would be better placed to look at his own performance and that of Devine when he was there rather than a company that he no longer has anything to do with," he said."

Home Loan Volumes Down

It is reported that home loan volumes are down. This does not bode well for property prices in the next few months.

Economics Blog

An interesting blog with stories about housing.

http://macrobusiness.com.au/

Q1 defects

See Courier Mail

THE developer of the Gold Coast's Q1 supertower is being sued over construction defects that allegedly have left the building requiring millions of dollars worth of repairs.

Only six years after its completion, the world's tallest residential building allegedly is riddled with corrosion.

Sunshine Coast Troubles

There was an auction last weekend of a large number apartments in the Crowne Plaza Resort near Caloundra, at Pelican Waters. None sold. See story from AFR:

"Heavy discounts, a year to settle and a $5000 rebate were not enough to entice buyers to a liquidation auction on the Sunshine Coast yesterday. Reed Property Group released the final 36 units in its 2005-built Crowne Plaza Resort & Spa in a Helmsman auction, where all units are offered simultaneously to boost interest.

Despite bids on 30 of the 36 units none was sold, although post auction talks continued later yesterday. Reed Property chief executive Ken Reed said the market was soft. “It’s a buyer’s market. Conditions on the Sunshine Coast are not too different from elsewhere in south-east Queensland,” he said.

An opening bid of $65,000 for an 88 square metre one-bedroom unit was the lowest offer made. One of the 512sq m penthouses attracted a maximum bid of $600,000 after it was listed for $1.58 million. Kings Beach residents Deborah and Jeff Taylor said the event was “a fizzier”. “The marker is so depressed at the moment. Things are selling for prices you wouldn’t believe. There are so many units on the market around here at the moment,” Mrs Taylor said.

The $65 million tower has access to a Greg Norman-designed championship golf course, pools, tennis courts and a gym."

Changes to Lot Entitlements for Some Apartments

After being approved by Queensland Parliament on the 6 April 2011, the Body Corporate and Community Management and Other Legislation Amendment Bill 2010 received Royal Assent on 14 April 2011, meaning that the new legislation is now in force. The new legislation will introduce a number of matters including:

• New principles to be used when determining Contribution and Interest Schedule Lot Entitlements
• A process where owners, who have been affected by a Lot Entitlement change, can submit a motion to the Body Corporate Committee before the 14th April 2014 to revert back to the Lot Entitlement Schedule before the change was made
• Additional requirements for Disclosure Statements and rights of termination
• Introduction of a new "Two Lot Scheme" module to make management of these smaller schemes much less onerous for their owners

Albert Street

Photo of Albert Street, showing M on Mary and Festival Towers. Note that these buildings will be impacted if and when the small 6 story building in the front of the photo is demolished and a new high rise is built on that site. See here, and here.

Madison Heights Bowen Hills

Metro Property Development and Pearls are marketing a 29 level high rise off the plan in Bowen Hills. The development is called Madison Heights Bowen Hills.

Metro is a recently formed company by David Devine and Ken Woodley. Both are ex-Devine (a listed company controlled by Leightons). Devine has a reputation for building low end apartment complexes. Pearls is an Indian development company.

The Madison Heights development has 182 studio/one bedroom apartments and 104 two bedroom apartments. This gives a total of 286 apartments. However, there are only 204 car parks. So taking into account visitor car parking, about 100 apartments will not have a car park. The development is in an industrial area, on Campbell Street, opposite the Courier Mail printing site, with good views of the hospital and inner-city bypass. There are no amenities around, so a car is needed.

The apartments are tiny. For example, an example two bedroom apartment is 70 sqm, including a 4 sqm balcony. (It is hard to call 4 sqm a balcony -- that is smaller than a bathroom.) Typically, I would not recommend a two bedroom which is less than 85 sqm internally, and even that is small. A good two bedroom should be at least 90 sqm internally. For comparison, you can buy modern two bedroom apartments that are 110 sqm internal.

And pricing is not cheap. A two bedroom, two bathroom which is 73 sqm internally plus a 4 sqm balcony on a low floor is listed for sale at $548,000. This is outrageous. This is over $7,000 a sqm.

Compare this two bedroom apartment in River City, a Devine building (developed by David Devine and Woodley). It is not a great quality building, and it is a few years old, but there is no reason to think Madison Heights will be any better. It is located on Albert Street in the city -- a much better location. It is 76 sqm internal plus 13 sqm balcony, with views of the Botanic Gardens. It has one car park, and is being sold furnished, for "offers over $450,000". So if it sells at $450,000, that will be $5,056 a sqm.

Take care!

Milton Park

Extracts from an FKP Press Release:

Brisbane City Council’s plan to turn the old Milton Tennis Centre site into parkland is set to benefit surrounding properties, with The Milton the only major new development now on the horizon, says a leading property researcher.

Michael Matusik, director of Matusik Property Insights, said council’s plans to resume the 3.5 hectare site for suburban parkland would reduce the future supply of new apartments in the suburb by about 670, increasing the ‘scarcity value’ of stock in Milton.

Mr Matusik said, along with the reduction in supply, homes and apartments in Milton would benefit from a three to five per cent price premium generally afforded to properties within a one kilometre radius of major parkland.

“The single most common feature of any metropolitan area’s position as a desirable residential address is trees, and while buyers want to be in close proximity to the city, public transport and amenities, they still want access to green open space.

Mr Matusik said the significant reduction in future supply as a result of the development of the parkland at the old Milton Tennis Centre site would put increased demand on new and existing property in the suburb.

The 30-level The Milton, which is anticipated to begin construction this year, will feature 298 one and two bedroom apartments, most with views of the CBD or Brisbane River, along with a ground floor retail promenade and commercial office space."

My comment: The proposed park is some time off. It is located on the other side of the railway and the other side of Milton Road to that of FKP's development. So I don't think it will have much impact to people's decision to decide to rent or buy on a development near the Milton Railway Station, that has views of the brewery.

Rental Yields

From an REIQ press release from Friday:

"Demand for rental homes in resource-rich regions of Queensland is continuing to drive up residential rental yields in some mining areas, according to the Real Estate Institute of Queensland (REIQ).

The REIQ residential rental yield report found that over the December quarter 2010, the postcodes of Dysart, Blackwater and Moranbah in Central Queensland recorded gross yields between 14.5 and 8.9 per cent because there remains more demand than supply for rental homes in many of these mining areas.

Across the state, however, the market conditions of the past 12 months has resulted in more sustainable gross rental yields given property prices have generally softened and rents have remained stable.

Australian Bureau of Statistics (ABS) figures show that investor numbers in Queensland increased in February compared to January however numbers remain at historic lows."

For apartments and townhouses:

Recent Auctions

• 2602/108 Albert St (Festival Towers) - 2 bedrooms - one of the better apartments in the building - withdrawn from auction and now listed at "over $500,000"
• 110/540 Queen Street (Willahra Tower) - studio - failed to sell - highest bid was a vendor's bid of $175,000

I have attended a few open houses on recent weekends, for 2 bedroom apartments in the middle ring suburbs, selling at less than $500,000. I was the only person who attended each open house. Not that many buyers around.

Market Cracks

See this story from Bloomberg:

Luxury Home-Price Cracks Emerge for Australia in Gold Coast, Noosa Heads

Extract:

Apartment prices in the luxury beachside Australian town of Noosa Heads have tumbled by a fifth since 2008 as cracks emerge in a housing market that’s so far escaped the rout seen in the U.S., U.K. and Ireland.

The median apartment price in the tourism and retiree town 150 kilometers (93 miles) north of Brisbane has slumped 21 percent in three years to A$570,000 ($594,000), according to the Real Estate Institute of Queensland. Sales have more than halved across Queensland state’s Sunshine coast, home to “Crocodile Hunter” Steve Irwin’s Australia Zoo, and the Gold Coast, known for its surfing beaches and casinos.

“We have a very overvalued housing market and even a small adverse shock can be magnified by a large adverse impact on property values,” said Gerard Minack, Sydney-based global developed markets strategist at Morgan Stanley (MS), who asserts Australian home prices are as much as 40 percent overvalued. “We’re seeing that now in parts of Queensland.”

The Rental Market in Brisbane

This is an extract from a real estate agent's newsletter who sells inner city apartments:

"Where does that leave the rental market??

Going up, up, up – as many people are forced to wait much longer than they had hoped or expected for rebuilding to commence and renovations to be completed. Almost 8,000 homes were inundated by the January floods, and another 10,000 homes were partially affected. This means that the homes of almost 40,000 people would have been somehow affected!

“The increasing demand (for rental properties) us likely to create upward pressure on rental rates as those displaced persons look for temporary accommodation over the next 6-12 months”, according to recent RPData report on the effects of the floods on the housing market. “The issue is that rental houses will be in short supply and many may have to opt for a unit instead.”

Tennyson Prices

It is interesting to see the current pricing for apartments being resold at Tennyson Reach. This is a Mirvac development in the middle of nowhere, and three more buildings are planned.

This complex was badly impacted by the floods. The Mirvac website says:

"Thank you for your enquiry through the Tennyson Reach website. Mirvac does not have any apartments for sale at Tennyson Reach but anticipates that apartments will be made available in the near future. "

They have put their sales program on hold -- they still have many unsold apartments in building three.

Currently, you can buy a prestige riverfront 3 bedroom apartment for $998,000, on the 6th floor. This is about $600,000 less than the original sales price. Beware, body corporate levies are high. The original purchaser would have lost a significant sum of money on this apartment. No guarantee that the next purchaser will not loose too.

From the USA

"Developers say that renters do not make the same price-per-square-foot calculation as buyers, and that smaller apartments — with some studios less than 500 square feet and larger one-bedrooms barely topping 1,000 square feet — will not discourage the target audience. "

See "Why Buy? You can spend tons renting"

Note that 1000 square feet is 92 sqm. You can't find many one bedrooms in Brisbane at 92 sqm. Brisbane apartments are small, and overpriced.

So buy in Florida

Trilogy Definitely Not Going Ahead - One less hotel for Brisbane

The Trilogy building, which was to be a mix of apartments, offices and a Mirvac hotel, is officially dead.

Despite reportedly good off-the-plan sales, it is now reported that the current owners of the land are selling to a Melbourne developer who will build an office tower on the site. This may impact some of the views from Aurora?

See Brisbane Times

Recent Sales

Some recent Brisbane apartment sales and auction results:

• Quay West, apartment 1506, 2 bedroom, sold last week, reportedly very close to listing price of $775,000
• Quay West, apartment 1505, 1 bedroom, sold last week, listing price $465,000
• Arbour on Grey, apartment 2302, 2 bedrooms, sold at auction yesterday for $611,000 according to APM
• Parklands Pinnacle, apartment 6017, 3 bedrooms, failed to sell at auction, sold after for $1.3M

Buyers Market

Even the most positive commentators say it is a buyers' market for residential property. And it seems that the Queensland property market is in worse shape than NSW and Victoria. And in Queensland, Port Douglas, Cairns, the Gold Coast and the Sunshine Coasts are in dire straights. I agree with the commentators. Some evidence:

• The Courier Mail makes money from property advertisements and thus tries to have positive stories about the property market and its advertisers (i.e., real estate agents). This Saturday's Courier Mail had no stories about residential real estate at all.
• Real estate agents are returning my calls when I say that I am looking to buy. I even have agents offering to be a buyers agent for me.
• In relation to sales in apartment buildings that I follow, for sales this month, the prices are flat or going backwards (10% to 20% declines in sales prices for comparable apartment property sales, compared with sales prices from six months ago). There are some exceptions to this.

It looks like the Brisbane apartment market is going to go backwards before it goes forward.

Flat

"Today, in the absence of (extra) government stimulus, the number of homes on the market has been steadily increasing again – in fact it’s up 47.5 percent year on year. There are currently 356,600 properties advertised online, and the trend suggests there are more coming onto the market (this week we found out that home loan approvals had its biggest fall in 14 years). ...

Even the most ardent property bulls are suggesting flat growth for the medium term. There’s an old investment adage that says you make your profits when you buy; property investors who buy today may have a long wait ahead of them."

Source: Barefoot Investor

Only Modest Gains

Australia’s housing market is likely to see only “modest” gains in prices as unusually wet weather and floods in Queensland slowed demand and first-home buyers remained on the sidelines, Moody’s Analytics said.

Full story here.

Rate Your Agent

Here is an interesting website, that allows buyers and sellers to rate the real estate agent. I hope it gathers traction. www.propertyscope.com.au

What happens when property values correct

This is an extract from an RP Data newsletter article, titled "What Happens When Australian Property Values Correct":

"... Another more recent example is Brisbane where values have been consolidating since the start of the GFC. Prior to the GFC the market peaked during Feb-08 and between this time and Jan-11 property values in the city have fallen by a total of -0.8%. The market recorded a slight rally during 2009 and early 2010 however, this is likely the result of aggressive interest rate cuts and the First Home Owner’s Grant Boost. Since Apr-10 property values in Brisbane have fallen by -4.7%. (See chart)

...

The proponents of a massive property price crash will potentially point to the Noosa Heads market in Queensland. Much like Sydney, Brisbane and Perth, Noosa Heads in recent years has recorded periods of capital growth well in excess of national averages. Also the market is almost entirely reliant on retirees, ‘sea changers’ and the tourism sector, none of these sectors are currently particularly active. Median house prices in Noosa Heads as at Dec-10 were -16.2% below their peak recorded in Aug-08. The unit market has fared even worse, median prices as at Dec-10 were -24.4% below their Feb-07 peak.

Whether you believe property prices will continue to grow, tank or flat-line, it is clear that you must be cautious when buying into markets which have had periods of surging property values and have yet to see a period of subdued growth or price falls (a correction).

Due to factors such as an ongoing demand/supply imbalances, a strong banking sector, low unemployment and improving economic conditions we don’t anticipate collapsing prices., However it is clear, based on the above examples that growth phases are often followed by a consolidation in values. Over time the combination of inflation, rising wages, rental increases and little or no value growth is likely to result in the property market once again becoming an appealing purchasing prospect. As the examples highlight, in some instances this may take a number of years as wages and rental yields catch up with the surge in home values and confidence in the market gradually returns."

Admiralty Two and Mosaic management rights for sale

Interestingly, the onsite letting pool consists of 79 out of 191 apartments, or 41% of apartments in the building. This suggests a very high level of owner occupiers in this building, which increases the value of these apartments.

Also for sale in an unrelated transaction are the management rights for Mosaic in the Valley, currently in off-the-plan sales stage. There are 212 apartments in this building, and it is expected that 180 will be in the onsite rental pool, which is 85% of apartments. Buyers beware!

Housing Flat in February - almost no growth over past year

From RP Data Press Release today:

"February's index result (0.0 per cent s.a.) suggests that Aussie home values continue to tread water despite robust household income growth. There was little revision to RP Data-Rismark's January estimates.

After a natural disaster-affected January (-1.5 per cent seasonally-adjusted or -0.7 per cent raw), RP Data-Rismark's Hedonic Index reports that Australian home values held ground during the month of February.

In the capital cities, RP Data-Rismark recorded flat dwelling values (0.0 per cent seasonally-adjusted or a slightly stronger +0.7 per cent in actual 'raw' terms). The 'rest of state' areas, which account for the 40 per cent of homes not located in the capitals, also displayed some improvement during February with house values rising by 0.5 per cent seasonally-adjusted (+0.3 per cent raw).

Over the 12 months to end February, Australia's capital city home values have hardly moved, rising by only 0.8 per cent. The story is the same in the rest of state regions, where home values remain unchanged (-0.2 per cent) over the last year.

In the property investment market, RP Data-Rismark estimate that gross apartment and detached house yields were 4.8 per cent and 4.2 per cent, respectively, in February. Darwin (5.7 per cent), Canberra (5.3 per cent), Sydney (5.1 per cent) and Brisbane (5.1 per cent) all offer reasonable rental yields in the apartment market. Melbourne is the laggard at 4.2 per cent. ...

A (near) double interest rate hike in November 2010 combined with numerous natural disasters has conspired to make the last three months difficult ones for Australia's housing market. ... While the weakness has been evidenced right across the nation, it has been especially acute in Darwin (-9.0 per cent) and the two resource-centric capitals, Brisbane (-3.3 per cent) and Perth (-1.9 per cent).

"Recent RBA analysis also shows that repossessions have been highest in Perth and South East Queensland, which helps explain the poor performance seen in these states. Indeed, Perth home values remain 0.7 per cent below their December 2007 levels", Mr Kusher added.

Over the 12 months to February, Sydney (+3.3. per cent), Melbourne (+2.5 per cent), Canberra (+0.7 per cent) and Adelaide (+0.6 per cent) have ground out modest capital gains. In contrast, Brisbane (-5.3 per cent) and Perth (-4.1 per cent) have experienced more material corrections. ...

According to RP Data's Mr Kusher, the key leading indicators indicate that capital growth is likely to remain very subdued for the time being, as Rismark and RP Data have previously forecast.

"Auction clearance rates have been a little weak, the number of homes advertised for sale is at the highest level it has been since we started collecting this data, and other lead indicators, such as the time it takes to sell a home, and the margin by which vendors have to discount their properties, are climbing again after reaching a plateau in recent months. Conditions are certainly in the favour of prospective investors. The large stock of homes available for sale should afford potential buyers increasing scope to negotiate on price and get the best possible deal," Mr Kusher said.

See Full Press Release