Monday, April 30, 2012

Rental Demand in Brisbane

Demand for rental properties continues to strengthen with vacancy rates tightening across the State, according to the Real Estate Institute of Queensland (REIQ). The REIQ March residential vacancy rates, released today, show the majority of regions experiencing strong demand from tenants with vacancy rates in many areas now below 3 per cent. A vacancy rate of 3 per cent is generally considered to be the equilibrium point of supply and demand. REIQ CEO Anton Kardash said the tightening rental market was a result of the slower sales market over the past 12 months in particular.

In Brisbane, the vacancy rate has reduced to 1.7 per cent, from 2.3 per cent in December last year. Brisbane’s inner-city recorded a vacancy rate of 1.4 per cent, down from 1.9 per cent in December. Agents from REIQ inner Brisbane accredited agencies report supply levels remaining limited as tenants stay put, students are settled for the year, and potential first home buyers still opt for a wait-and-see approach. Investment properties currently up for sale are largely being bought by owner-occupiers which is also contributing to less rental stock overall.
Source:  REIQ Press Release

I have been monitoring availability of unfurnished two bedroom apartments in the Brisbane downtown area.  Let me say that there are not many of such apartments available for rent.

Limited but real competition

"So how have things actually faired in the last four months? agents report patchy progress, but on balance they have been more encouraged since we hit the new year. many described their 'best months for some time' during February and March. the upshot seems to be this – vendors have reached their bottom price and buyers are now willing to meet them. most sellers who had to get out of the market come-what-may have done so. If not, they have found alternative strategies and decided to hold onto their dirt until the next upswing. Buyers who were putting in substantially discounted offers on properties are finding there is now limited but real competition. as a result if they want to secure some real estate, they do have go beyond their ridiculously low dream price and get a little dose of reality. the outcome has been more sales volume but prices remain flat. For example, sub $1m in good locations is doing just fine and if you’re a first home buyer within 10 to 15km of the CBD, then you’ll probably find there is a little more competition to secure some real estate."
HTW Month in Review

Saturday, April 28, 2012

Unemployment

I like this quote from the Chief Economist from Morgan Stanley:
"Traditionally what has hurt people has not been rising (interest) rates but rising unemployment. I don't care what rate you're paying, if you have a mortgage five times your income and you lose your job, you're toast.''
See Daily Telegraph from 2009.
Easy credit followed by high unemployment rates is a good indicator of whether there will be a residential property bust.  Look at Spain, with 25% unemployment for example.  So at present, Queensland should be safe.  But if the mining and construction boom ends....

Units the Way to Go: RP Data

"Within a 10-kilometre radius of each city centre the opportunities to purchase units below $500,000 are much more abundant than they are to purchase detached houses. Across all cities, 69% of suburbs within 10 kilometres of the city centre have a median unit price below $500,000 and each individual city has at least 20% of suburbs with a median price below $500,000."
Source
Table showing Median Unit Prices

Friday, April 27, 2012

111+222 Hole plus 103 Mary Street



Photo today of the 111+222 hole (still with water) and the demolition site for 103 Mary Street.  You can see 212 Margaret Street in the background and River Park Central to the right.


Wednesday, April 18, 2012

Devine bullish about Brisbane


“We are very bullish in a market people are saying is the worst they have seen in 20 years," Devine says.
“Brisbane is in the doldrums in terms of the property market, but not in the doldrums for Metro. We know what we are doing and there are people out there who love what we are doing."

Sunday, April 15, 2012

111+222 in Brisbane

The 111+222 development appears to be moving forward, with the smaller tower (commercial office space at 111 Mary Street) being built first it seems.


The large tower will be 90 storeys, located at 222 Margaret Street.  The plans are for a hotel from level 5 to level 21, and apartments from level 24 to level 88.  
See www.111plus222.com

Dog Allowed, Yet Again

"Based on the material presented, I am not satisfied the committee’s decision to deny the applicant’s pet request was reasonable in the circumstances. This is particularly the case given that no evidence has been provided to suggest the dog barks excessively or otherwise causes a nuisance which interferes with other owners use and enjoyment of a lot or common property. Accordingly, I consider the applicant should be granted permission to keep her dog in her unit pursuant to by-law 11. "

See Gateway Gardens Decision

Saturday, April 14, 2012

Kurv in Newstead

A proposed new development in Newstead, called Kurv.  It is located at 31 Longland Street, Newstead.





  • Ground floor restaurant and offices.
  • Five levels of 55 apartments
  • 25 – studio apartments
  • 30 – two bedroom apartments

Macrossan Residences Sale

I bet well-known Brisbane solicitor and Labor Party identity Con Sciacca is not happy.  He purchased an apartment off-the-plan in 2008 in Macrossan Apartments for $1,835,000.  The developer went bankrupt, and the remaining apartments have been bought by an investor, who is listing them for resale at "Almost $1 million below what they cost."
"Were Selling for up to $3M, Now Priced from $1.395M to $1.575M"

(I suspect that the real estate agent is exaggerating slightly - I doubt that the same apartment that Con purchased would sell for less than $1M.  So the million dollar discount is a bit of a stretch.  Video here.)

These discounts make it hard for an original buyer to resell without making a huge loss.

In any event, even these discounted prices are high for a 3 bedroom apartment that is not riverfront and that is sandwiched by Skyline and Soleil.

Readjustment of contribution schedule lot entitlements

"Much of the animosity between the applicant and the body corporate committee has arisen following his submission to the committee of a motion to reverse contribution lot entitlements to the “pre-adjustment level”. Based on advice that it had obtained from MBA Legal, the committee declined to lodge a new community management statement reflecting “pre adjustment lot entitlements”. As a result, the applicant issued a number of circulars to other lot owners regarding his request for a reversion of lot entitlements.

Within bodies corporate, few issues have been more polarising than the adjustment and/ or readjustment of contribution schedule lot entitlements (CSLE’s) which set the proportion each owner contributes to body corporate expenses. The Body Corporate and Community Management Act 1997 previously provided that in certain circumstances, an owner could apply to the District Court or a specialist adjudicator for an order to have the original entitlements adjusted. Where such an order was made, levies payable by some owners decreased while others increased.

In November 2010 the Minister for Tourism and Fair Trading introduced into parliament a bill to amend the Body Corporate and Community Management Act 1997This bill was passed by parliament in early 2011 and changed the criteria for adjustment of contribution lot entitlements. These amendments also include a procedure for certain owners to seek a reversal of previous adjustment orders. Except in limited circumstances, such as where the adjustment order merely formalized an agreement made by the parties, or there has been a material change such as further subdivision, the body corporate is obliged by the legislation to lodge a new community management statement reflecting the original lot entitlements. Where such action is taken, levies payable by some owners decrease while others increase.

Given that all lot owners are members of the body corporate, it is important that they have an opportunity to air any grievances and have input into the management of the scheme. Owners often have opposing views on various matters, but in my view robust discussion and debate is an important part of body corporate decision-making. This requires that, within reason, all owners feel free to express their point of view without unreasonable threats of defamation proceedings."

See Q1 Decision

Friday, April 13, 2012

Another Big Loss For Off-The-Plan Buyer

Many buyers in Niecon's The Oracle development at Broadbeach purchased off the plan and failed to settle.  A recent court decision shows the losses that an off-the-plan buyer may suffer if the buyer does not settle.

Purchase price for apartment 601 - $1,010,000
Plus holding costs & interest from settlement until court judgment - $196,631
Less estimated net proceeds if sold today - $700,000
Plus agents fees to sell - $29,645
Plus legal fees to sell - $2,200
Less Deposit - $101,000
Total owed = $437,476, plus interest at 12% until this is paid, plus legal costs of the lawsuit.


So this buyer lost a total of at least $538,476, which is more than 50% of the contract price for the apartment, and didn't get the apartment.  Note that the valuation of the apartment dropped 30%.  Take care when buying off the plan.  (And read this book first!)

Brisbane Not Yet At Bottom


For Apartments:
The Brisbane apartment market fared worse than the house market in the last six months of 2011 and faces an oversupply of this type of property.  REIQ figures for the December quarter 2011 show that rental vacancies in inner Brisbane – where most of the stock is apartments – increased from 1.4% in the September 2011 quarter to 1.9% in the December 2011 quarter while the overall city vacancy rate remained unchanged at 2.3%  

In addition, valuation firm LandMark White is warning that a combination of too many projects and historically low demand could result in an oversupply of new apartments in inner-city Brisbane suburbs like Fortitude Valley and Bowen Hills.

The firm’s property valuers believe affordable “entry-level” apartments within five kilometres of the CBD will continue to appreciate in value but expect values in prestige units in new complexes to continue to fall.
“We have seen demand for prestige units decline again, with extended marketing periods or heavy price reductions,” says WBP.

On the other hand, “entry-level units are being purchased by single professionals who require affordable housing and access to the Brisbane CBD. We have recently seen volumes of sub-$400,000 unit sales increase.”

Michael Yardney is very bearish about Brisbane units, placing the market in the relatively early stages of a property downturn at three o’clock.

“There are a large number of off-the-plan apartments available in the Brisbane CBD and surrounding suburbs. Many of these remain unsold, and this oversupply of properties will put downward pressure on prices and rentals,” he says.  “Many of the apartments that have been sold off the plan are coming on stream in the next few years and have been purchased by investors.  Some will have difficulty getting finance and settling their purchase. Others will be disappointed to see the end value of their properties is less than their purchase price,” Yardney says.

“There will be an oversupply of inner-CBD and near-CBD apartments in Brisbane for a few years, causing prices to fall slightly.”


For houses:
As the house price growth figures from RP Data show, Brisbane’s housing market continues to fall.
House prices were flat over the final quarter of 2011, according to figures compiled the Real Estate Institute of Queensland, which says that one year on from the floods, the housing market is showing signs of stabilising.

Michael Yardney, Louis Christopher and Charles Tarbey all believe Brisbane has some way to go before it bottoms out.

“House prices in Brisbane have dropped for the last two years. Brisbane buyers are lacking confidence to re-enter the market and are sitting on the sidelines waiting for signs that the market has bottomed before they make a purchase,” says Yardney.  “This may occur later this year as Brisbane prices stabilise. Prices are unlikely to start rising until the second half of this year or 2013.”

ANZ lift interest rates, after 5pm on Friday

In a bad sign for property owners, ANZ has announced it will lift rates by 0.06%.  Effective 20 April 2012, ANZ’s new standard variable mortgage rate will be 7.42%pa.

If you are a customer, probably a good idea to leave ANZ.

Malaysians Big Buyers of Brisbane property

See Courier Mail story.  Property developer are pushing sales in Asia.

Saturday, April 7, 2012

Midwood Report - Brisbane OK

"The outlook for the new Brisbane apartments market remains healthy with supply and demand evenly matched, but the Gold Coast market continues to struggle with sales of new apartments still at post-GFC lows, according to the latest Midwood Report.

Unconditional sales of new Brisbane units increased from 74 in the November quarter 2011 to 186 in the February 2012 quarter. Stock levels have declined to 1,446 from a peak of 1,683 in May last year, which equates to two-and-a-half years’ worth of supply at current sales rates.

Investors have been spurred on by rising rental returns, with one-bedroom inner-Brisbane flats registering rental growth over the past 12 months of 9% to a median of $300 per week, with a smaller 4% increase in two-bedroom flats ($380).

The strongest-selling project was David Devine’s Metro Property Madison Heights development in Bowen Hills, which clocked up 57 sales with prices ranging from $350,000 for a one-bedroom apartment to $434,000 to $556,000 for a two-bedroom apartment. Madison Heights features 296 apartments, with 200 sold since launch of the project in March 2011. There were also 15 sales at Metro Property’s The Chelsea development also in Bowen Hills, with 190 out of 195 apartments now sold in the project. Prices range from $355,000 for a one-bedroom apartment to $546,000 for a two-bedroom apartment, and there were 20 sales recorded for Brooklyn on Brookes in Fortitude Valley, Metro’s joint development with Indian-based developer Pearls. The other strong performer was Meriton’s 81-storey Infinity Tower, currently under construction, with 34 sales recorded and prices ranging from $470,000 for a one-bedroom apartment to $650,000 for a two-bedroom unit. To date 123 out of the 287 apartments in the tower have been sold."

Full article here at Property Observer.

Domain or RealEstate.Com.Au ?

When looking for a property to buy or rent, it is worth looking at both Domain and REA.  Note that for REA, advertisements can only be placed by real estate agents.  If an individual landlord or seller wishes to advertise, then only Domain will accept the advertisement.  Accordingly, Domain will have different (and possibly more) listings than REA, and often at a better price or rent (because agents fees are not being paid.)

Tuesday, April 3, 2012

Roma Street Parklands - Recent Sales


Here are some recent sales of apartments in the Roma St Parklands complex in Brisbane, which was developed by Pradella in around 2002 to 2006:

  • Apt 3006, 3 bed, $520,000
  • Apt 3093, 1 bed, $360,000 
  • Apt 3107, 1 bed, $370,000
  • Apt 7046, 2 bed, $621,000
  • Apt 6039, 3 bed, $1,475,000
  • Apt 3081, 3 bed, $590,000
  • Apt 6028, 3 bed, $1,300,000
  • Apt 3120, 2 bed, $637,000
What is interesting here is that of the eight resales listed above, only 1 was less than the purchase price that the seller originally paid.  Also, at least 5 were sales to owner occupiers, and one was a sale to a super fund.  All apartments seem to have Parklands views.


Monday, April 2, 2012

RP Data March 2012 Report

From an RP Data press release:
    Australia's housing market is showing signs of stabilising after home values rose 0.2 per cent in March. Not only has the market remained unchanged for the quarter ending 31 March 2012, it is also level with the 31 November 2011 home values across the combined capital cities. The flat result over the quarter is the strongest result since March 2011 when values increased by 0.7 per cent.
    According to the managing director of Rismark International, Ben Skilbeck, “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in calendar year 2011. This month it was the resource rich states which delivered the strongest gains with Perth, Darwin and Brisbane up 1.4 per cent, 1.1 per cent and 0.8 per cent respectively”.
    Other market metrics are also showing some improvement. “The number of properties available for sale is continuing to moderate from the historic highs which peaked late last year and auction clearance rates have been holding above 50 per cent for most of 2012,” Mr Lawless said.
    See:  RP Data Press Release .  See also Property Observer
    Brisbane apartment prices are up 0.7% for the month, but down 2.3% year on year.

Decision Making Tips

When buying or selling an apartment, it often gets down to a negotiation on price, with the agent repeatedly ringing buyer and seller, trying to get an increase in the offer or decrease in price. It is not uncommon for the agent to bully, flatter and confuse both parties to get a deal done.  Research shows that in such circumstances, a person may get decision fatigue, and make a bad decision.  My practice is not to make a buying or selling decision after lunch, but to sleep on it, and decide in the morning, without influence from the agent.

The more decisions you make, the worse they get to a marked degree -- you are more likely to make crucial mistakes or, put off a decision and miss an opportunity. One solution is an unbending set of investing rules, which minimise the need to make decisions.  Making fewer decisions improves willpower so much that it should have a major effect on investing performance.

For the same reason, decisions made earlier in the day are much better than those made later.  Rather than implying that you should hurry decisions, however, this indicates that in investing, you should get better results from a systematic process of studying an investment until you have enough evidence, then actually making the decision the next morning. The "sleep on it" principle.

In today's market, there should be no rush for a buyer to close a deal.
See article in NY Times Magazine.

Sunday, April 1, 2012

Apartment Sun

When buying or renting an apartment in Queensland, it is a good idea to understand which way the apartment faces, and to view the apartment in the morning and afternoon.  The sun will shine in, and with the trend for large windows, this makes the apartment bright but potentially hot.  Below are some photos of apartments at the Roma Street Parklands (Pradella's development), including the expensive Pinnacle building.  Notice that the blinds are drawn in the penthouse apartments.  Even though these apartments have a great view, and do not face west, that is not much use if the blinds are always closed.





Surfers Paradise

I visited Surfers Paradise this weekend to look at the Hilton and Soul apartment buildings.  The local area was no paradise.  The beach was great, but the built environment was horrid.  Closed or run down shops.  Poor quality shopping.  Fast food restaurants.  Topless bars.  Bad street-cape.  Not a nice place to visit with the family or for a romantic vacation.  No wonder prices have fallen, and according to Matusik, they still have a way to go to reach bottom.  Hilton tower illustrated above.

Kickstart coming, or not?


Comment from a reader on a prior post and newspaper story from this week:

Referring to the extract from the AFR: Qld Property Due for Kick Start:

One contributor to that article states in para 4: Quote:  “Because of the huge influx from the resources companies in the office towers, I think what is going to happen within six months is people will have to pay three months’ to six months’ rent in advance to secure an apartment,” Woodley says. “There really aren’t many being built.” Unquote.

According to and as reported in Australian Property Investor Magazine, January 2012 issue, (page 109) there were 5,957 units on the market for sale in Brisbane as of October 2011, not Queensland, BRISBANE!   

Repeat Quote: “There really aren’t many being built.” Unquote.  I find that statement very puzzling.  In excess of one thousand apartments are in current construction in some form around the Brisbane CBD 2km circle.

Resource workers all already have a home or somewhere to live and if have families, have an existing home, rented or under mortgage or owned outright.  They all know the story of their friends who invested their hard earned cash into Gold Coast Units and lost and the resource unions are already warning  their members about a repeat of this scenario of the 90’s fore-seeing harder times to come in that industry as China winds back just as the Japanese did in the early 90’s despite the upbeat talk about the mining “boom”.  And the contributor has also over-looked this: Resource workers are all on “contract labour” employed by labour hire companies, not the mining companies themselves. They have no full time job and are employed essentially by the hour only. They can be and are, dismissed with no notice or reason.  The banks will not lend to people in this employment situation.   They are not bankable in this economy.

Saturday, March 31, 2012

Another Victory For the Dog

Body Corporate for River City Apartments CTS 31622 v McGarvey [2012] QCATA 47 (12 March 2012)
"The relevant context, in my opinion, is simply that there may be a number of types of scheme, in which owners and occupiers may have a number of different objectives and uses for their lots, and the very nature of any community titles scheme requires that relationships between owners and occupiers must be regulated in some discernible fashion, and by reference to reasonable criteria unless otherwise specifically provided.

So where does this leave a by-law such as by-law 13, which purports to prohibit altogether the keeping of animals on a lot?

In McKenzie, the by-law in question did not prohibit the keeping of pets, but only the keeping of certain types of pets. Therefore, I concluded, it did purport to regulate, rather than to prohibit, a use of lots in the scheme – namely, the keeping of pets.

In prohibiting the keeping of pets altogether, the by-law in this case is analogous to a by-law that prohibited altogether a particular manner of using or enjoying a lot by carrying out building works. In Mineralogy, the Court of Appeal expressed the view that such a by-law would be invalid. Similarly, a by-law that prohibited altogether the playing of music in a lot would be invalid, whereas one that prohibited playing music above a certain level of sound between certain hours would be one regulating the use and enjoyment of lots.

In my view, a by-law that prohibits altogether the keeping of pets in lots is not a by-law regulating the use or enjoyment of lots, but purports to prohibit a particular use and type of enjoyment altogether. It therefore goes beyond the scope of a valid by-law permitted by s 169 and is invalid."

Friday, March 30, 2012

AFR: Qld Property Due for Kick Start

Extract from Story in the AFR:

For years now, much of Queensland has been a home-grown testament to how property booms can go dreadfully wrong. But a select few see the parlous state of the Queensland housing market as a rare opportunity to pick up homes with great growth prospects at bargain prices. Many see the landslide election of the LNP government as a key catalyst.

Earlier in March, private equity firm Engage Capital bought 19 luxury apartments from the Bank of Scotland in The Macrossan tower in central Brisbane, developed by Macquarie Group. Engage Capital director Ben Grootemaat says he paid about $1 million less for each apartment than off-the-plan prices. He thinks Brisbane values have bottomed and he plans to sell the homes straight away, claiming there is strong demand for the right kinds of apartment at the right price. “There is a lot of demand, especially for three-bedroom residences,” he says. “We have a strong level of interest.”

He’s not the only one positive about the sunshine state. Veteran developers Ken Woodley and David Devine founded apartment developer Metro in March 2010. Since then they have bought or are in the process of buying 2500 apartments in inner-city Brisbane. Woodley says the company sold more than 450 apartments last year, and hopes for a similar result this year. The drivers he is banking on are a tight rental market and the influx of resources employees.

“Because of the huge influx from the resources companies in the office towers, I think what is going to happen within six months is people will have to pay three months’ to six months’ rent in advance to secure an apartment,” Woodley says. “There really aren’t many being built.” But he’s also hoping a confidence boost will come with the reforms new Premier Campbell Newman has promised to deliver in his first 100 days in office. One is stamp duty exemptions for the principal place of residence, which may become law on July 1, costing the government $900 million.

Combined with more interest rate cuts that most banks are still expecting, housing will become more affordable. “I would think those two things would kick start the market,” Woodley says.

The value of houses in Brisbane fell 7.6 per cent in the 12 months to the end of February, according to RP Data Rismark, the worst decline in any mainland capital. The fall in values and dearth of credit have caused a plunge in building. Mirvac research figures show per capita housing levels in Queensland have plunged to their lowest levels since about 2002. But Hoke Slaughter, Morgan Stanley head of real estate investing in Asia, believes the supply-demand picture in Queensland will be “quite attractive” when the market finally recovers. And there are certainly some bargain prices on offer.

Queensland has been littered with receivership sales. Receivers KordaMentha predicted last month there would be an increase in the volume of distressed assets put to market in the state this year as financial institutions attempted to clean up their loan books. Savills agent Greg Harris is selling new townhouses on the Gold Coast that were once priced at $635,000 for about $500,000. He says although prices have fallen 30 per cent, rents haven’t.

Australian Property Monitors senior economist Andrew Wilson says some “green shoots” are emerging in Brisbane. Home values fell 1 per cent in the three months to February, according to his figures, a slower rate of decline than last year. There were other early signs of improvement, such as an increase in home loans and positive feelings about the new government, which may improve buyer sentiment. “The whisper around is we’re just starting to get some early cycle momentum in that Brisbane market,” Wilson says. “With the election behind them, there is always a honeymoon period for the market, which can lead to a more positive attitude.”

Monday, March 26, 2012

Evolution Sales - Massive Losses for Investors

I have written in the past about Evolution, and how Citimark sold these apartments off-the-plan at high prices.  It is not the greatest quality building in my opinion.  Most of the original buyers from Citimark were Korean.  Evolution opened in 2008.  Here is some recent sales evidence:
  • Apt 245, sold off the plan in 2006 for $767,500.  Resold in November 2011 fully furnished for $605,000.
  • Apt 184, sold off the plan in 2006 for $660,500.  Resold in November 2011 for $460,000.
  • Apt 153, sold off the plan in 2009 for $570,000.  Resold in October 2011 for $410,000.
  • Apt 276, sold off the plan in 2006 for $701,000.  Resold in September 2011 for $620,000.
  • Apt 163, sold off the plan in 2007 for $649,500.  Resold in September 2011 for $435,000.
  • Apt 194 sold off the plan in 2006 for $512,720.  It is currently listed for sale for $510,000.  Based on the above, it will be lucky to be sold for above $460,000.
This shows massive capital losses for each of these buyers.  Take care when buying from developers off the plan.  Take extra care if buying from Citimark!


Ray White Auction Results

I went to the Ray White auction yesterday.  Some results concerning apartments:
  • Apt 2804 Charlotte Towers, 1 bed, 1 bath, no car - sold prior to auction
  • Apt 2808 Charlotte Towers, 2 bed, 2 bath, 1 car - sold for $510,000.
  • Apt 3409, Festival Towers, 2 bed, 2 bath, 1 car - passed in at $480,000.
  • Apt 287, River Place, 2 bed, 2 bath, 1 car - unsold, inspect now!

Saturday, March 24, 2012

My reflections on the inner Brisbane apartment market

Here are my thoughts based on my non-scientific observations:

  • Most of the apartments sold in inner-Brisbane in the past year have been one bedroom apartments.
  • Thus, the medium price will be lower, because the kind of apartments selling are the smaller, cheaper apartments.
  • However, many apartments are being sold below the previous sale price for that same apartment.
  • In a number of buildings, the prices being achieved for apartments are equivalent to prices in 2007.
  • Two bedroom apartments above $600,000 are not selling.  If they do sell, the contract often crashes.
  • In some quality buildings, prices have not deceased, but there have been few sales.
  • Vendors are discounting if they need to sell.
  • Rents are increasing, but so are body corporate fees.
  • Apartments being sold off-the-plan are being sold at prices that well exceed the price of similar existing apartments.
A sample of sales from a Ray White report is set out below.  (Double click on image to see larger version.)

RP Data Capital Market Report

RP Data's recent Capital Market Report 2012 had the following information regarding Brisbane:

  • Brisbane's capital gains have been well below the combined capital city average since 2009.
  • Compared to Brisbane's long-term and medium term gains, the last 12 months has recorded an extremely weak performance.
  • Brisbane sales volumes are currently at their lowest levels since 1996.
  • Average discount levels across the city current sit at 8.8% for apartments (compared to 2010, when it was 7.4%).
  • Apartments in Brisbane are currently taking an average of 72 days to sell (compared to 55 days to sell for the 12 months prior).
  • For the apartments sold in 2011, the average hold time was 7 years.

Friday, March 23, 2012

Another Milton Development

Walker Corporation announced it had bought land in Brisbane's inner west to embark on a new a $100 million-plus development with shops and 243 apartments across two towers, 12- and 20-storeys high.

Walker Corp has bought for a new mixed-use project at Milton in Brisbane was sold by Mominvest C, a company owned by Sydney-based John Hayson. The 3240sq m property fronting Milton Railway Station on Railway Terrace is an amalgamation of eight housing lots, with development approval for 243 apartments and shops.

Walker Corp plans to build one- and two-bedroom apartments priced between $420,000 and $550,000 within the traditionally industrial and low-density residential area where the Lion Nathan Brewery is also located. "Our project will provide high-quality, yet affordable accommodation for young people, who want to live less than 2km from the CBD," Mr Walker said.

The purchase is diagonally opposite FKP's The Milton project (at one time called Union).  According to the AFR yesterday, The Milton is close to 50% pre-committed (whatever that means).  It will be interesting to see if the Walker buildings block the views from The Milton.

See The Australian and AFR

The risk of falling prices

Financial comparison website RateCity CEO Damian Smith said borrowers who have taken on a home loan with a small deposit are most at risk from the impact of falling prices.

For example, if a property was purchased for $400,000 with a 5 per cent deposit, but then that house price fell by 10 per cent, instead of having $20,000 of equity value in the property, there would be none at all.

"If you try to refinance in those circumstances, you will find yourself owing more than the property is worth - a mortgage of $380,000 as against property value of just $360,000," Mr Smith said.

Average Australian capital city property values fell by 3.6 per cent in 2011, according to the latest RP Data-Rismark Home Value Index. For a $400,000 home, that decline translates to a new value of $385,600. Property values declined in every capital city with Brisbane experiencing the biggest fall of 6.8 per cent. Full story here

Thursday, March 22, 2012

Where will the next Apple Store be in Brisbane?

An Apple Store was tipped for Macarthur Chambers on Queen Street, but it has not arrived.  A story in Brisbane Times suggests it has been delayed due to a contractor going bust.

Laing O'Rourke reports that it has signed up a two level Apple store at its McLachlan & Ann (M&A) building in the Valley.  See Press Release.

The Apple Press Release website had no news last time I looked, but the Apple job website says that there will be a new store in Brisbane.

I suspect it will be a positive influence to have an Apple Store nearby.

Negative Equity

The share of homes with mortgages worth more than the property's value increased at the end of last year as the housing market stalled and prices turned lower. The rise suggests an increase in negative equity, where a mortgage can be worth more than the value of a house. Property information group RP Data said that 6.4 per cent of homes were valued at less than their purchase price in the December 2011 quarter, rising from 4.9 per cent of the market in the September quarter. By city, Brisbane fared the worst with 9.2 per cent of property deemed to be "underwater" in financial terms, followed by fellow mining state capital Perth at 7.4 per cent.
See Brisbane Times, Smart Company and Business Spectator

Newstead Riverpark


"Developers FKP and Mirvac are major players in the quest to turn 17ha of prime riverfront land into a vibrant new community.  Located only 2km from Brisbane CBD, the Newstead Riverpark urban renewal precinct will become a residential hub, dining and entertainment venue, shopping destination and employment district."
Full story here.

Monday, March 19, 2012

Low rise or high rise apartment?

"First-time property investors buying off the plan should consider low-rise apartments over high-rise units, according to developers and market analysts."
See Property Observer