Midwood Report

UNIT sales are leading an improvement in turnover within Brisbane's property market, with 260 deals in the three months ending November.

It compares with 174 the previous quarter. The sales show Brisbane's unit market is becoming balanced with only 13 months' supply, according to the latest Midwood Investment Report.

Report author Bill Morris said that with approvals already in place for shelved development sites, there was the opportunity to quickly reintroduce them to the market. The unit resurgence follows some improvement in the more prestige end of the housing market, which had been lacklustre for more than a year.

Courier Mail

A leading Queensland property expert says there is an oversupply of apartments for sale on the Sunshine Coast.

The author of the Midwood Queensland Investment Report, Bill Morris, says only 71 apartments were sold in the latest November quarter. He says the Sunshine Coast has many more apartments ready and waiting for sale than Brisbane and the Gold Coast.

"The current figures show there's about three years of supply sitting there in new apartments at the current take-up rate or demand," he said. "The Gold Coast has got around 18 months supply and Brisbane's even less. Brisbane's about 13 months supply. So Sunshine Coast has a lot more apartments for sale in terms of take-up or sales."

ABC News

Projects are falling by the wayside as developers struggle to obtain finance, Bill Morris said, and this is contributing to the housing supply demand deficit.

Source

Annual Rate of Return for Apartments in Downtown Brisbane

Often, there are statistics that are published that set out the change in the medium house or apartment price. These statistics are often not helpful. For example, if in one quarter there are many low end properties that are sold, and in the next quarter, there are many top end properties sold, the medium price will increase. Similarly, if there are new apartments entering the marketplace, this will most often result in an increase in the medium price for the area. However, in both these cases, you cannot say that values have increased.


I think that it is more useful to track the gains on resale of the same property over time. I have looked at three quality apartment buildings in Brisbane, namely Admiralty Towers, Admiralty Two and Quay West on Alice Street to see what capital gains owners have made. I have looked at all apartments that have been reported as sold this year (2009), and then looked back to see what the owner paid when first purchasing the apartment. In all but one case, the resale was the third or more resale of the same apartment. I have then calculated the Annual Rate of Return, using this calculator. The Rate of Return only looks at capital gains, and does not take into account rent received, expenses paid or transaction costs such as stamp duty or agents fees. Here are the results (with P-Price being the original purchase price on the P-Date; and Sell Price being what that owner received when reselling this year):

Lot	P-Price	P-Date	Sell Price	Sell Date	A RoR
Admiralty Towers One
5	$282,500	2/08/01	$520,000	25/09/09	7.77%
73	$490,000	19/10/06	$600,000	30/06/09	7.79%
76	$498,000	15/05/03	$685,000	31/08/09	5.19%
92	$510,000	21/03/07	$545,000	7/08/09	2.83%
119	$810,000	1/02/06	$1,200,000	19/03/09	13.36%
Quay West
23	$230,000	6/12/02	$420,000	8/07/09	9.57%
24	$435,000	16/05/08	$450,000	18/04/09	3.74%
49	$256,000	4/11/95	$425,000	25/09/09	3.71%
55	$310,000	10/05/04	$440,000	25/02/09	7.58%
68	$585,000	4/03/05	$675,000	11/10/09	3.15%
99	$400,000	13/08/96	$700,000	25/09/09	4.35%
120	$275,000	28/04/97	$460,000	2/09/09	4.25%
Admiralty Two
20	$445,000	13/09/04	$725,000	11/05/09	11.03%
47	$700,000	29/08/05	$945,000	1/09/09	7.77%
81	$720,000	23/11/07	$725,000	27/03/09	0.51%
94	$615,000	19/12/06	$730,000	7/05/09	7.45%
97	$340,000	20/02/98	$780,000	12/06/09	7.61%
106	$490,000	15/11/04	$750,000	24/06/09	9.67%
107	$485,000	1/02/02	$990,000	15/08/09	9.92%
124	$615,000	13/04/07	$750,000	19/10/09	8.20%
137	$432,000	22/03/97	$815,000	15/07/09	5.28%

Annual Rate of Return for Brisbane Apartments

Often, there are statistics that are published that set out the change in the medium house or apartment price. These statistics are often not helpful. For example, if in one quarter there are many low end properties that are sold, and in the next quarter, there are many top end properties sold, the medium price will increase. Similarly, if there are new apartments entering the marketplace, this will most often result in an increase in the medium price for the area. However, in both these cases, you cannot say that values have increased.

I think that it is more useful to track the gains on resale of the same property over time. I have looked at three quality apartment buildings in Brisbane, namely Admiralty Towers, Admiralty Two and Quay West on Alice Street to see what capital gains owners have made. I have looked at all apartments that have been reported as sold this year (2009), and then looked back to see what the owner paid when first purchasing the apartment. In all but one case, the resale was the third or more resale of the same apartment. I have then calculated the Annual Rate of Return, using this calculator. The Rate of Return only looks at capital gains, and does not take into account rent received, expenses paid or transaction costs such as stamp duty or agents fees. Here are the results (with P-Price being the original purchase price on the P-Date; and Sell Price being what that owner received when reselling this year):

Lot	P-Price	P-Date	Sell Price	Sell Date	ARoR
AD1
5	282500	2001	520000	25/09/09	7.77%
73	490000	2006	600000	30/06/09	7.79%
76	498000	2003	685000	31/08/09	5.19%
92	510000	2007	545000	7/08/09	2.83%
119	810000	2006	1200000	19/03/09	13.36%
QW
23	230000	2002	420000	8/07/09	9.57%
24	435000	2008	450000	18/04/09	3.74%
49	256000	1995	425000	25/09/09	3.71%
55	310000	2004	440000	25/02/09	7.58%
68	585000	2005	675000	11/10/09	3.15%
99	400000	1996	700000	25/09/09	4.35%
120	275000	1997	460000	2/09/09	4.25%
AD2
20	445000	2004	725000	11/05/09	11.03%
47	700000	2005	945000	1/09/09	7.77%
81	720000	2007	725000	27/03/09	0.51%
94	615000	2006	730000	7/05/09	7.45%
97	340000	1998	780000	12/06/09	7.61%
106	490000	2004	750000	24/06/09	9.67%
107	485000	2002	990000	15/08/09	9.92%
124	615000	2007	750000	19/10/09	8.20%
137	432000	1997	815000	15/07/09	5.28%

Reiq Unit Statistics

Locality	Median Sep Qtr 09	Change over qtr"	Median 12 months to end of Sep 09	Median 12 months to end of Sep 08	Change over 1yr"
BRISBANE (LGA)	$389,500	1.9%	$380,000	$385,000	-1.3%
BRISBANE (SD)	$365,000	2.5%	$355,000	$355,000	0.0%
ALBION	N/A	N/A	$385,000	$375,000	2.7%
ASCOT	$385,000	5.0%	$377,448	$417,500	-9.6%
AUCHENFLOWER	$395,000	-12.2%	$429,500	$407,000	5.5%
BOWEN HILLS	N/A	N/A	$420,000	$422,500	-0.6%
BRACKEN RIDGE	N/A	N/A	$349,750	N/A	N/A
BRISBANE CITY ~	$447,000	27.4%	$420,000	$450,000	-6.7%
FORTITUDE VALLEY	$387,000	-11.0%	$397,500	$365,000	8.9%
HAMILTON ~	$450,000	16.9%	$410,000	$462,500	-11.4%
INDOOROOPILLY	$435,000	11.1%	$422,000	$401,750	5.0%
KANGAROO POINT	$473,000	12.0%	$418,500	$475,000	-11.9%
KELVIN GROVE ~	$408,500	-24.4%	$430,000	$399,000	7.8%
NEW FARM	$456,500	4.8%	$445,000	$487,500	-8.7%
NEWSTEAD	$531,000	0.2%	$530,000	$530,000	0.0%
PADDINGTON ~	$467,900	20.7%	$431,250	$440,000	-2.0%
SHERWOOD *	$475,937	39.0%	$425,000	$349,500	21.6%
SOUTH BRISBANE	$410,000	1.9%	$399,000	$450,000	-11.3%
SPRING HILL	$400,000	0.0%	$384,000	$385,000	-0.3%
ST LUCIA	$460,000	1.1%	$442,500	$450,000	-1.7%
TARINGA	$397,000	-0.5%	$389,000	$370,000	5.1%
TOOWONG	$425,000	-5.1%	$391,000	$415,000	-5.8%
WEST END	$514,990	1.0%	$520,000	$565,000	-8.0%

Sunland buys Devine's French Quarter

Sunland Group will make its first foray into Brisbane's apartment tower market after acquiring a parcel of land in the CBD. The developer has acquired nearly half of the French Quarter site from Devine, and will seek planning permission for a tower that will feature about 200 upmarket apartments. Devine has sold several other assets in recent months.

Article from Gold Coast News

"But while one landmark disappears, another emerges, with Sunland planning to build an 'icon' on the 2067sqm site.

Company managing director Sahba Abedian said the tower would feature 200 luxury apartments, including two and three bedrooms and sub-penthouses, aimed for the baby-boomer market.

He said a development application would be lodged with Brisbane City Council within six months."

Inner City Rents in Brisbane

"Tenants in West End and Kangaroo Point are paying up to 40 per cent more in rent than this time last year, as more people eye off luxury living in the inner-city.

As the phasing out of the first home-buyers grant buoys the rental market in Brisbane, premium apartment developments have pushed rental prices higher in the inner-city, according RP Data research analyst Cameron Kusher."

See Brisbane Times

Take Care Buying Off the Plan

If you believe the sales agents hired by developers who sell apartments in Brisbane off-the-plan, you can't go wrong. Sign today, but don't pay for a few years. Population growth. Depreciation benefits. Get is early to choose the best apartment. Early buyers will get the best price. There will be a price rise soon, so sign today!

But there are huge risks:

• the building may never start, and so the deposit is tied up for years
• the apartment may look different to what you expect, or have a worse view
• there could be development next door, impacting your view and the location
• the developer could onsell the development, and so you end up buying from someone other than who you signed with
• the apartment may be up to 5% smaller than set out in the marketing plans
• the quality may be different to what you expect.

However, the biggest risk is that you pay the wrong price. You are trying to guess tomorrow's price today. And let me tell you, prices do go down. In addition, you are paying for the developers marketing and sales costs, which is often more than 5% of the the purchase price. So you are 5% behind before you start.

Let's look at some examples of buildings marketed off-the-plan to see how the purchasers did.

Devine is selling Hamilton Harbour like hot cakes. Let's see their track record. Here are some example resales for Charlotte Towers, their most recent Brisbane apartment development. I have looked at typical midlevel apartments:

Apt 2003 - purchased Jan 05 for $444K, resold July 08 for $425K

Apt 2210 - purchased Dec 04 for $333K, resold Jan 09 for $312K

Apt 2302 - purchased March 07 for $483K, resold March 09 for $468K

Apt 2307 - purchased Sept 06 for $497K, resold May 09 for $490K

Apt 2308 - purchased Sept 05 for $501K, resold Feb 09 for $485K

Apt 2410 - purchased Dec 04 for $351K, resold March 08 for $310K

Apt 2608 - purchased Sept 04 for $508K, resold Aug 09 for $492.5K

Apt 2703 - purchased March 06 for $492K, resold Feb 08 for $461K

Apt 2908 - purchased Feb 05 for $508K, resold Nov 08 for $485K

Keep in mind the the purchasers paid stamp duty of between $5,000 and $15,000 and agents fees to sell the apartment of roughly $12,000, then you can see that many of the off-the-plan purchasers lost more than $30,000, after holding for 3 to 5 years.

Another example is FKP's Vue apartments, at 92 Quay Street, Brisbane.

Apt 1106 - purchased Oct 04 for $400K, resold July 07 for $368K

Apt 1205 - purchased Oct 04 for $475K, resold July 07 for $440K

Apt 2008 - purchased Jan 05 for $504K, resold Aug 08 for $480K

Apt 2409 - purchased June 06 for $535K, resold Feb 09 for $445K

So take extreme care building off the plan, as you may end up paying too much for something that you don't like or want.