"BRISBANE: Unit prices in an an exclusive city residential tower continue to soar in the face of economic crisis, and cashed-up investors are lining up for a piece of the action.
The Riparian Plaza in Eagle St houses three of the inner-city’s most expensive residential properties sold last year, and their values were up 27 per cent compared to similar properties sold at the same time in 2007."
See City NewsMirvac's Tennyson Reach project sold extremely well to start, but sales appear to have stalled. There are six apartment buildings planned for the site, at Tennyson in Brisbane on the same site as the Queensland Tennis Centre. Although more than 65,000 tennis spectators attended the recent tournament last week, no apartments were sold during the event.
The first two apartment buildings on the site, containing 115 apartments released in June 2007, sold out in three days. Prices ranged from $943,000 to $4.9M. These two buildings should be read for occupancy in the next 5 months.
The third building, currently for sale off the plan, has 92 apartments. Released in December 2007, 70 apartments still remain for sale. Originally marketed with a minimum price of $805,000, the minimum advertised price has now been reduced to $698,000.
According to the AFR, Mirvac plans to release building 4 at the end of 2009.
There are more than 10 resales listed on RealEstate.com.au. These include:
My guess is that these prices will drop, as a number of owners will not want to or can't settle, and rents for these apartments will be luck to be more than $800 a week.
Signature 87 by Juniper. Prices said to range from $5.98 million to $6.995 million. So the top end can't be too bad if Juniper releases this. Completion due late 2010. According to the AFR, David Kortlang from Juniper said investment in Mooloolaba and ocean front properties remainded strong. But the AFR said only 36 new units (from an inventory of 818 new units) sold on the Sunshine Coast in the six months to November 2008.
The combination of continued population growth and an undersupply of residential stock will lead to increased prices in the long-term, Mr Gross said.
Pradella's large-scale Parklands at Sherwood development is also likely to underpin growth, with stage one of the $150 million project nearing completion.
"As new, quality stock hits the market, it is anticipated the median rental figures for apartments in Sherwood will also grow significantly, providing investors with exciting purchasing opportunities," Mr Gross said.
See Brisbane Times
"Saying we have passed the worst is a brave call in an environment where the world economy is in such a poor state. The risks that remain for us are that unemployment increases significantly and immigration is slowed as a consequence of government reacting to the higher level of unemployment. The balance to this is the lower interest rates which will reduce defaults while people continue to hold down a job."
"As a blanket rule you should stay out of the Gold Coast market, Western Australia and Brisbane units unless you are very well researched. These markets will be ripe for the picking late in 2009 when we should have passed their bottom but currently they look as if the risks are too high and the bargains will not yet be presenting sufficiently. Sellers will still be holding unrealistic expectations."
Reports 7.06% growth in Brisbane apartment prices in 2008, and 10% rent growth for same period. Sales volume drops from 16,000 to 12,370 Brisbane apartment sales (comparing 2007 and 2008 years).An interesting presentation regarding construction costs, including pipeline of developments, is located at:
www.mitbrand.com.au/"With more than 90% of the 1, 2 & 3 bedroom apartments sold, limited opportunities remain to invest in SL8’s West End apartments. The two bedroom apartment final release is now selling from $565,000-$975,000."
Source: SL8 websiteDevine has new content on its Hamilton Harbour website, www.hamiltonharbour.com.au
"1, 2 & 3 bedroom apartments $295,000 to $1.59M
Beyond their own boundary, Hamilton Harbourites have easy strolling access to the dining, shopping, cinemas and City Cat terminal which already make this riverside enclave one of Brisbane's most attractive new places to live and work.
At the upstream end of Northshore, Brisbane's grandest and most ambitious ever urban renewal initiative, Hamilton Harbour is a landmark development which can place you at the centre of the city's astounding future growth. As a resident, tenant or investor, Hamilton Harbour demands your serious attention."
Queensland fire fighters say overhead sprinklers saved an inner-Brisbane apartment block from serious damage. More than 30 residents were evacuated from the River City apartment block around midday, after a fire started in a couch on a balcony of the 15th floor of the building.
Fire fighter Dave Sutch says overhead sprinklers helped contain the fire, but also caused some damage. "We have severe water damage on the 15th floor and it's leaking through to the 14th floor," he said. Residents were not allowed back into their apartments for more than two hours while fire crews secured the building.
ABC News"The unit market on the Gold Coast is investor driven. There s currently a good selection of high-rise units available for sale in Broadbeach, Southport, Coolangatta/Kirra and Surfers Paradise. A majority of the units currently available for sale include both developer stock and resale stock within new developments. A large proportion of the resale apartments are being offered for resale by distressed owners and hence have asking prices which reflect a reasonable discount on both their original sale price and also the price levels of the balance new apartment product in new unit projects. In this respect, it is very difficult to attract sales of new apartments given the more competitive pricing structure of the resale apartments. A large proportion of new apartment product on the Gold Coast is sold to interstate and to a lessor extent, overseas investors at price levels which are considered to be in excess of local market values. It will take some time for these stock levels of units to be absorbed especially given the current soft market conditions. Some purchasers, who bought ‘off the plan’ 12 to 24 months ago, are foregoing their deposits before settlement on new product rather than absorbing the loss in market value on settlement."
"It appears there will be more pain to come however for how long and to what extent is difficult to predict. The property market of 2007 is a distant memory with current market values being more reflective of values achieved in 2006."
Source HTW"FKP intends to continue discussions with Stockland, to ascertain whether a transaction in the best interests of FKP securityholders can be consummated."
See FKP Media Release from December 2008
See RP Data Rismark Indices released at the end of December.
generally provided the best capital growth.”
“Market activity is already showing signs of increasing at the lower end of the pricing scale,” he said."
See also Press Release
From The Australian
"THE boom in beachfront real estate on the Gold Coast is well and truly over..."
Extract:
"I'm ending my discussion of this issue in 2004, but throughout the years since, a number of analysts have emerged on both sides of the housing bubble question. So I do not claim to be comprehensive in my review. I just wanted to call attention to a few of the more prominent analyses that crossed my desk when the housing bubble first caught my attention.
There were many economists who did see it coming, but there were many others of equal or greater prominence and authority who repeatedly insisted that there was nothing to worry about. Under the circumstances, ordinary investors can hardly be faulted for taking actions that unwittingly fueled the bubble and are now having disastrous consequences for themselves and the nation."
At the beginning of 2008, I made a number of predictions in this post.
The predictions were mostly wrong!
The Brisbane apartment market did not grow significantly in 2008, and took a minor step backwards. At present, there are fewer buyers and more sellers. For some off-the-plan developments, no sales have been made for months. Second tier buildings and buildings with more than 200 apartments have not done well.
So I will be careful with my predictions for 2009:
I still believe that quality inner city apartments in Brisbane will do well in 2009. Provided there is no significant unemployment and provided that foreign students continue to come to Brisbane, vacancy rates will remain low.
In 2008, only four new inner city apartment buildings completed and settled. These were Evolution (over priced), M on Mary (which has mostly 1 bedroom apartments, and the developer is now in liquidation), Flow at West End and Iceworks at Paddington. In 2009, no new large inner city apartments will settle. Groundwork has started on Mertion's Soleil and the Trilogy Tower project, but these will no complete until 2012. Mirvac's Tennyson Reach project will settle two buildings in 2009, and FKP's SL8 at West End will also probably complete in 2009. So not much new stock.
So here are some predictions for 2009:
• The price of a good quality 2 bedroom 2 bathroom apartment in Brisbane, with views, will range from $780,000 to $850,000.
• The price of an average quality 2 bedroom 2 bathroom apartment in Brisbane will struggle to pass $550,000.
• Average rent for an unfurnished 2 bedroom apartment will rise to $600 per week.
• Investors will return to the market, as interest rates are falling and rents are rising.
• There will be more action in the inner suburbs than in the city. Prices for quality apartments in areas such as Indooroopilly and Toowong (where there is a train station and regional shopping, close to education facilities) will boom. By the end on 2008, it will be hard to find a good quality 2 bedroom apartment in these areas for less than $600,000.
• The Gold Coast apartment market will tank even more. The Sunshine Coast apartment market will remain steady.
"He said two factors in the past two months had prompted the downgrade of its residential inventory.
He said there had been a "massive downturn" in the top end of the residential market.
Secondly, the company had made a "conscious decision" to sell some high-end projects outright at a discount to their carrying value.
Mr Quinn said: "The first home buyers are well and truly back because it is now cheaper to buy than to rent."
Stockland had started to reconfigure some high-end projects to create more affordable products.
"Traditionally, 20-25 per cent of our market is first home buyers. They now represent 45 per cent of our total buyer profile." He said sales had picked up nationwide."
See The Australian
"A ceiling on rate increases for Brisbane's CBD unit owners under Brisbane City Council's controversial new rates policy will be debated at today's last council meeting for 2008.
Lord Mayor Campbell Newman promised to introduce the policy from the third quarter of the 2008-09 financial year, which starts on January 1.
The scheme was proposed at June's Brisbane City Council budget and - suggested lifting the general rate paid by unit owners so they pay an equivalent rate to home owners in a property of the same value."
Brisbane Times
"December 3rd, 2008
GOLD Coast real estate may fall a further 20 per cent over the next year, according to one of the city's leading property forecasters. Author of the Midwood Report Bill Morris said while the Gold Coast's median house price fell by only 3.7 per cent in the September quarter, it marked the start of a long and consistent drop in property values that could last 18 months.
Mr Morris last night told a group of property watchers at a seminar unveiling his November-quarter Queensland Investment report his gloomy projection was based on the skewed correlation between house prices and rental returns.
Mr Morris said that while rental returns languished around 4 per cent, house prices would continue their downward slide. "Because of the increase in house prices over the past five years, which has been about 100 per cent, despite declining demand, it has meant rental returns have gone down significantly and are now unacceptably low," said Mr Morris. "They are currently about 4 per cent gross which is stifling the investment market. Really, 5 per cent is acceptable and to do that you can either increase rents by 20 per cent or have a decrease in house prices by 20 per cent."
Investors would only return to the market once rental returns became more attractive, he said.
Mr Morris's analysis came on the same day that AMP chief economist Shane Oliver also predicted a rough ride for Gold Coast property. Mr Oliver yesterday told The Gold Coast Bulletin he expected property nationwide to fall an average of 10 to 15 per cent, but predicted the Coast may fare worse. "I see coastal locations where people had a holiday home coming under pressure," said Mr Oliver.
Mr Morris expected a market recovery would take 12 to 18 months."
"THE economics of Australia's $3.3 trillion housing market is widely misunderstood, with sensationalist claims that a housing bubble caused the global credit crisis and that Australian house prices will fall by 30 per cent to 50 per cent. In fact, the latest RP Data-Rismark Index results show that Australian house prices declined by just 0.8 per cent in the 12 months to October this year, and increased during the most recent three months.
...
In Australia, the hyperbolic predictions of economists Steve Keen and Gerard Minack that house prices will fall by 30 per cent to 50 per cent have been relentlessly recycled in newspapers and purportedly credible programs such as 60 Minutes and The 7.30 Report.
The doomsayers' claims are based on the assumption that housing affordability is at an all-time low.
They dismiss the fact house prices are determined by supply as well as demand (affordability is a demand-side factor) and conclude that prices must fall by some arbitrarily large margin. Keen likes to shock by quotingstatistics about the rise in household debt without acknowledging that debt-servicing ratios have remained unchanged thanks to vastly lower real interest rates, the emergence of two-income households and higher real incomes.
Recent analysis by the Reserve Bank of Australia has comprehensively demonstrated that housing affordability is not at an all-time low. According to one of the Reserve Bank's benchmarks, the representative household in June 2007 had more real disposable income left over after purchasing a home and servicing a 90per cent mortgage than at any other time since June 1982.
The bank also found that the representative household could afford to buy 33 per cent of all homes in June 2007, which, although less than the historical average of 45 per cent, was markedly better than the 13 per cent of homes available to it in June 1990.
Importantly, the Reserve Bank's present 4.25 per cent cash rate is considerably lower than the 6.25 per cent rate that existed in June 2007. Since mortgage rates peaked at 9.6 per cent in August, the Reserve Bank has pushed them down to about 6.7 per cent, with markets predicting that they will be less than 5 per cent by mid-2009. At the same time, house prices have not appreciated...."
"The Reserve Bank believes Australia's housing market is leading the US by three years, having entered into its downturn in 2004. There is also a consensus between the Reserve Bank and most economists that the doomsayers' predictions will be proven wrong. A striking counterfactual is the 1990-92 recession, when unemployment hit 10.9 per cent yet house prices rose by 2 per cent a year according to the Australian Bureau of Statistics.The media would do well to interrogate sensationalism."
From a Pradella newletter:
"Despite Brisbane's uncertain property market, buyer confidence remains strong for Waters Edge with an unprecented $40 million in sales made since its launch. Forty-eight of the 221 apartments have sold to a mix of investors and owner-occupiers, as buyers look to quickly capitalise by purchasing at the unique site."
"Consisting of two eight-storey buildings, named Drift and Reach, one, two and three bedroom apartments are available, priced from $540,000.In addition to the apartments, there are 32 premium absolute riverfrontage apartments called the Riverfront Collection that have a total area of between 188-332m2, consist of 3 bedrooms, 2 bathrooms plus a separate multi-purpose room and study, priced from $1.795 million are for buyers searching for the ultimate in inner-city luxury living."
Based on RP Data-Rismark Index results, RP Data head of research Tim Lawless believes that the doom and gloom merchants have misunderstood the fundamentals and the diversity of the Australian residential property market by predicting that Australia was headed for a market-wide implosion in 2008.
“The facts are that over the past 12 months Australian property values have declined by just 0.8 percent which is a phenomenal result when compared to the S&P/ASX 200 index which reported a decline of 40.5 percent,” Mr Lawless said. “The October RP Data-Rismark Index results reinforce my suggestion that the Australian property market has moved through the bottom of its cycle.” ...
For savvy investors the timing to enter the market is now better than ever according to RP Data’s Tim Lawless – “For investors who are willing to go against the flow, buying conditions are exceptionally strong and yields are improving every month,” he said.
“The fundamentals underlying the Australian property market are extremely robust. Investors need to take into account current supply constraints, infrastructure delivery, immigration, vacancy rates, rising rents and expectations that interest rates will continue to fall. These are the basics that should fuel capital gains for investors.”
Melbourne, Brisbane & Sydney
In the 10 months to October 2008, Melbourne residential values have been flat (+0.2 percent) while Brisbane (-1.7 percent) and Sydney (-1.9 percent) are off slightly. However, during August, September and October 2008 Melbourne (+1.1 percent) and Sydney (+0.5 percent) property values have increased consistent with the overall market recovery following the Q2 contractions.
See Press Release and Details
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