Dog v. Body Corporate Committee - Dog Wins Again

Harbour Lights [2014] QBCCMCmr 264 (21 July 2014)

Quote:

In McKenzie v Body Corporate for Kings Row Centre, the scheme in question was a high rise building. Despite this, the Tribunal found the scheme could prima facie be suitable for the keeping of pets. Following this decision, I am not satisfied the unit in question is inappropriate for the keeping of this dog merely because it is a ‘unit’ (as opposed to a house or other dwelling type) or contained in a high density housing area. Further, I note that no evidence whatsoever has been presented to suggest that the dog in question is too large or otherwise inappropriate to be housed in the applicant’s unit. Accordingly, I am not satisfied these arguments form a reasonable basis to deny the applicant’s pet request.

Brisbane has under performed, but is gathering momentum

Double click on the above to make bigger.  Source:  RP Data

Arbour on Grey

One of the better buildings in the South Bank / South Brisbane area is Arbour on Grey, located on Grey St and Little Stanley Street.  It was developed by Mirvac, and is a high quality complex.  It has views of South Bank, and apartments on the higher floors can see the river.  (It is only 4 floors high.)

The two bedroom apartments are typically about 90 sqm internally, with a large balcony of about 20 sqm.  So much larger than many off-the-plan two bedroom apartments currently being marketed.

Some recent sales:

Apt 1307, located on level 3 - 2 bedrooms, 2 bathrooms, 1 car, facing the river - $735,000
Apt 1215, located on level 2 - 2 bedrooms, 2 bathrooms, 1 car, facing Grey St - $620,000
Apt 2204, located on level 2 - 1 bedroom, 1 bathroom, 1 car, facing Grey St - $467,250

Some apartments currently for sale in the complex:

Apt 1110, located on level 1 - 1 bedroom, 1 bathroom, 1 car, large apartment facing Grey St
Apt 2218 - under contract
Apt 2312 - under contract
Apt 2214 - 3 bedroom floor-through apartment on level 2

Limited Stock Available for Sale

In Brisbane (and also the Sunshine Coast), there are a limited number of apartments listed for sale by owners (excluding off the plan and developer sales).  Some agents are saying (for the first time in years) that there are more buyers than sellers for apartments.  In some suburbs, there are very few apartments listed for sale, and in some larger buildings, there are no listings at all.  That being said, prices are up, but not dramatically.

One could conclude that:

• owners don't think it is a good time to sell
• owners believe that prices will rise soon, following on from the trends in Melbourne and Sydney
• owners are still underwater, and don't want to sell at a loss, and so are waiting for further price increases before selling
• interest rates are low, and so holding costs are low -- why sell a cash flow positive property?
• Brisbane is a good long term investment
• buyers believe that the Brisbane market will improve
• off the plan developments are overpriced, and so buyers are looking at existing apartments, which are better value

Property Indices

RP Data's blog had a post responding to a Fairfax criticism of the RP Data property index,  It is worth reading.  One interesting graph shows property price index v. ASX index is included below.

The Highgate in Highgate Hill

Pointcorp is marketing The Highgate located in Highgate Hill, next door to the famous Torbreck building.  Looks like it will have great views north to the city.  The complex will have 42 apartments starting at $1.5M.  The developer says that is sees a demand for premium apartments in Brisbane, in the $1M to $2M range.  The AFR below reports 108 sales in Sunland's Abian on Alice Street and good results for SouthPoint and Pinnacle presales.

Recent Brisbane Apartment Sales

iStay River City - 79 Albert St

Apt 1201, 1 bed, 1 bath - sold on 27 July for $335,000

Charlotte Towers - 128 Charlotte St

Apt 2404 - 1 bed, 1 bath, no car - sold on 27 July for $340,000
Apt 1201 - 1 bed, 1 bath, no car - sold on 18 July for $365,000
Apt 4403 - 2 bed, 2 bath, 1 car - sold on 29 May for $650,000
Apt 2803 - 2 bed, 1 bath, 1 car - sold on 2 May for $495,000

Skyline - 30 Macrossan St

Apt 53 - 2 bed, 2 bath, 1 car - sold on 27 July for $603,000
Apt 193 - 2 bed, 2 bath, 1 car - sold on 2 June for $618,500
Apt 31 - sold on 16 May for $750,000

M on Mary - 70 Mary St

Apt 1205 - 1 bed, 1 bath, no car - sold on 2 July for $322,500
Apt 4302 - 5 bed, 3 bath, 3 car - sold on 31 May for $1.9M
Apt 1009  - 1 bed, 1 bath, 1 car - sold on 26 May for $365,000
Apt 506  - 1 bed, 1 bath, no car - sold on 10 May for $395,000

Festival Towers - 108 Albert St

Apt 3807 - 2 bed, 2 bath, 1 car - sold on 30 June for $516,000
Apt 1503 - 2 bed, 1 bath, 1 car - sold on 25 June for $460,000
Apt 4007 - 2 bed, 2 bath, 1 car - sold on 10 June for $541,000
Apt 704 - 1 bed, 1 bath, no car - sold on 5 June for $298,500
Apt 2610 - 1 bed, 1 bath, 1 car - sold on 3 June for $400,000
Apt 905 - 1 bed, 1 bath, no car - sold on 2 June for $319,500
Apt 2510 - 1 bed, 1 bath, no car - sold on 22 May for $350,000
Apt 2301 - 2 bed, 2 bath, 1 car - sold on 9 May for $525,000
Apt 508 - 2 bed, 2 bath, 1 car - sold on 8 May for $475,000

Felix - 26 Felix St

Apt 217 - 2 bed, 2 bath, 1 car - sold on 29 June for $580,000

Riverplace - 82 Boundary St

Apt 92 - 2 bed, 2 bath, 1 car - sold on 27 June for $645,000
Apt 147 - 2 bed, 1 bath, 1 car - sold on 23 June for $551,000
Apt 52 - 2 bed, 1 bath, 2 car - sold on 7 May for $650,000

Admiralty Towers One - 35 Howard St

Apt 44 - 2 bed, 2 bath, 1 car - sold on 8 June for $810,000
Apt 146, 2 bed, 2 bath, 1 car - sold on 12 May for $585,000

Infinity - 43 Herschel St

Apt 3807 - sold on 27 May for $400,000
Apt 4303 - 2 bed, 2 bath, 1 car - sold on 26 May for $630,000
Apt 6304 - 2 bed, 2 bath, 1 car - sold on 20 May for $640,000

212 Margaret St

Apt 82 - 2 bed, 2 bath, 1 car - sold on 26 May for $555,000

Admiralty Quays - 32 Macrossan St

Apt 137 - 3 bed, 2 bath, 2 cars - sold on 12 May for $1,100,000
Apt 34 - 2 bed, 2 bath, 1 car - sold on 2 May for $850,000

Riparian - 71 Eagle St

Apt 4302 - 1 bed, 2 bath, 2 car - sold on 8 May for $1.5M

Admiralty Towers Two - 501 Queen St

Apt 166 - 3 bed, 2 bath, 2 car sold on 28 April for $979,900

Aurora - 420 Queen St

Apt 301 - 2 bed, 2 bath, 1 car - sold on 26 April for $627,500

Quay West - 132 Alice St

Apt 103 - 1 bed, 1 bath, 1 car - sold on 24 April for $510,000

Meriton Soleil Resales - Some up, some down

It is interesting to see how resales have gone for off-the-plan purchasers in Meriton's Soleil (501 Adelaide St, Brisbane).  Some original buyers have profited, and some have lost.  I am not convinced that the risk in buying off-the-plan, when you can't see the view or quality or feel of the apartment, is worth it, when it seems that there is a good chance that you can buy the same apartment when complete for less.

Apt 5304 - Sold off-the plan in June 2009 for $543,000, resold in June 2014 for the same price.  This is a loss, because of stamp duty and agent's selling fees.

Apt 2403 - Sold off-the plan in August 2012 for $493,725, resold in April 2014 for $525,000.

Apt 5505 - Sold off-the plan in August 2009 for $669,240, resold in April 2014 for $600,000.

Apt 5604 - Sold off-the plan in November 11 for $586,000, resold in April 2014 for $565,000.

Apt 4404 - Sold off-the plan in April 2012 for $485,000, resold in April 2014 for $572,000.

Apt 4004 - Sold off-the plan in March 2009 for $502,000, resold in March 2014 for $570,000.

Brisbane Apartments outperforming Brisbane Houses

According to RP Data:

"Capital city dwelling values were 1.1 per cent higher over the three months ending July, taking the aggregate capital gain to 5.0 per cent for the year to date across the combined capital cities. The gain was mostly centred in Sydney, Melbourne and Canberra where dwelling values rose 2.0 per cent, 1.8 per cent and 2.1 per cent respectively over the rolling quarter to offset the falls recorded in other capital cities. The Darwin market also recorded a capital gain over the past three months (+0.8%) while the remaining capital cities all recorded a drop in values (Brisbane -0.4%, Adelaide -2.6%, Perth -0.1%, Hobart - 1.2%)."

However, looking at the breakdown of the statistics, Brisbane apartments are doing much better than Brisbane houses.

Brisbane apartment prices (to 31 July 2014):

July 2014 - up 1.3%

Quarter - up 0.8%

Year to Date - up 3%
Year on Year - up 7.4%
Median price based on settled sales of Brisbane apartments over the quarter - $390,000

Lawsuit over carpark

A long running lawsuit about a car parking space reached conclusion recently, with a decision from the Queensland Court of Appeals.
See Hadgelias Holdings and Waight v Seirlis & Ors [2014] QCA 177
A person purchased an expensive apartment, and was told that there were 3 car parks, but in fact, there were only 2 carparks plus a storage space.  Damages were awarded in favour of the purchaser.

An interesting calculation quoted in the judgment, where it was stated that the value of the apartment at the time was falling at a rate of $45,000 month, independent of the car park issue:

"Using apartment 4404 as a basis for valuing the Seirlis apartment in April 2010, he deducted the following amounts from its January 2010 sale price of $2.65 million: $135,000, to represent the three months which had elapsed to April 2010; $50,000 for its superior fit-out; $60,000 for its additional two floors in height; and $100,000 as the estimated value of the third car space. That brought him to a figure of $2.305 million for the value of Mrs Seirlis’ apartment. From the sale price of apartment 4804 in October 2009, $2.9 million, he deducted $270,000 to represent the passage of six months, $180,000 to reflect the six floor difference, $50,000 for its superior fit out and $50,000 for the value of its storage facility. That gave a value for Mrs Seirlis’ apartment of $2.35 million as at the date of
contract."

Interest Rates and Housing Bubble in Australia?

Interest rates for residential housing are at lifetime record lows.  Banks are awash in cheap cash that they want to lend.  Lending standards have deteriorated, and money is being loaned out willy nilly.  Good established properties in Brisbane are selling quickly at good prices.  Those wanting to invest are turning to off-the-plan apartment developments, where it is an easier process to sell and buy -- but at higher than market prices.  Is housing price growth solid and sustainable, or a bubble?

When buying, questions to consider:

• What will happen when quantitative easing ends in the USA?
• Will there be inflation?
• What is the risk of the Australian government removing negative gearing, and what impact will this have on property prices?
• What will happen if China property prices collapse?  What will happen if Chinese buyers stop buying in Australia?
• In a year, will all off-the-plan buyers be able to settle?
• Why are off-the-plan prices for apartments much higher than similar properties that the developers have sold, and the first owner is reselling?

An interesting article re the possible bubble is here.

Housing Price Supply and Demand

From the AFR on 30 July 2014, p. 28

"Recent house price appreciation has been driven by more than simply a strongly growing population.  Low interest rates have encouraged domestic investors to allocate assets into housing.  Foreign investors have also been buying.  A reduced rental return on housing would eventually discourage domestic investors but probably comes with a lag.

The apparent equalisation between an undersupply of housing versus strong demand for dwellings in major metropolitan areas comes as the official cash rate remains at a record low of 2.5%, and as the major banks lower their fixed rate home loans in an attempt to entire more people to borrow more."

This article applies more to the Sydney and Melbourne markets than Brisbane.  It is important to look at individual markets, and not take southern trends and blindly apply them to Brisbane.

RP Data June Index Results

Capital city dwelling values have shown a 1.4 per cent capital gain over the month of June 2014, with all cities apart from Adelaide and Darwin recording a rise in dwelling values. According to RP Data research director Tim Lawless, the strong result has partially reversed last month’s 1.9 per cent fall and provides a - 0.2 per cent decline in dwelling values over the June quarter.

Mr Lawless said, “With interest rates remaining low for the foreseeable future, it is doubtful that housing values will start to slide, at least not at a macro level. What is more likely is that natural affordability constraints will start to dent buyer demand, as will the low rental yield scenario’s that are very much evident across the largest capital cities of Melbourne and Sydney.”

Other indicators such as clearance rates are holding relatively firm which, according to Mr Lawless, further reinforces the notion that the housing market isn’t set to show a market correction. 

Brisbane apartment prices (to 30 June 2014):

June 2014 - up 0.7%

Quarter - up 1.4%

Year to Date - up 1.7%
Year on Year - up 5.4%
Median price based on settled sales of Brisbane apartments over the quarter - $385,000

Not out of the woods yet

I was speaking with a U.S. homeowner recently who handed her keys back to the bank.  She bought a house in NY State about 5 years ago, substantially renovated her house, but it was still way underwater today.  From what she told me, there are many other homeowners who are still in negative equity in the U.S.  And there are a large number of homes still going through the foreclosure process in some states.

One company that has been buying up U.S. homes is Waypoint.  Have a look at the Waypoint website  to see their rental homes.  They list and manage directly, without agents.  An interesting story about Waypoint is here.  There is consolidation occurring in the buy-to-rent market in the U.S.

China Impact

Four recent articles in the AFR are of interest in relation to the impact of China on Australian property.

"Spike in approvals for foreign investment in housing" (AFR, 12 June 2014, p. 36): The FIRB has approved a big jump in applications to buy Australian housing.  In dollar terms, the investment approved is up 67%.

"Chinese buyers key to market: Triguboff" (AFR, 12 June 2014, p. 36):  Meriton raised the issue of whether those who were allowed to buy homes because they were temporary residents, sold them when they ceased to be Australian residents.  In the 2012-13 year, 43.7% of FIRB approvals were for temporary residents to buy established dwellings, because foreign buyers who do not have permanent residency, can only buy new homes.  Meriton pointed out that the annual report of the FIRB did not report on compliance.

"We are part of the Chinese market.  The buyers compare me [Meriton] with the prices in Shanghai and Beijing.  If the price falls in China, that will affect us," Mr Triguboff said.

"China's housing vacancies signal property bubble" (AFR, 12 June 2014, p. 10): A report estimates that there are 49 million vacant homes in China, resulting in a vacancy rate of 22.4%.  "Once expectations change, the high vacancy rate will puts lots of pressure on prices and we could see them collapse."

"President targets naked civil servants" (AFR, 11 June 2014, p. 14): A group of Chinese bureaucrats, dubbed the luoguan or naked officials have become the latest target of President Xi Jinping.  They move their families and money to foreign countries.  "No one know how much this new approach will affect universities and real estate markets in favoured destinations like Australia as the numbers are hard to pin down.  But they are not small."  There are estimated to be about 1.2 million naked officials at the end of 2012.

"House prices second highest in the world" (AFR, 12 June 2014, p. 5): Australia may have the world's second-most expensive housing market behind Belgium, according to the IMF.

McGrath's View of Brisbane

Chief executive of McGrath Estate Agents and founder of the Australasian Real Estate Conference, John McGrath, said residential property in southeast Queensland had years of price increases ahead of it.

“Sydney and Melbourne have a couple of years to go (with price growth) and I think the market here (in Queensland) has three to four years to go of price growth,” he said.

Chinese property investment was also set to become increasingly important to southeast Queensland.

“It hasn’t yet hit southeast Queensland anywhere near the degree I expect it to,” Mr McGrath said. “At this point southeast Queensland has not been explored thoroughly and I think you’ll find huge Chinese buying coming into the Gold Coast and Queensland over the next few years as well.”

Full Story Here.

Values Fall!

From an RP Data Press Release today:

Dwelling values record first month-on-month fall since May 2013 

For the first time in 12 months, dwelling values across Australia’s capital cities showed a monthly fall by dropping 1.9 per cent in May.  Across most of the individual capital cities, dwelling values were also down over the month, led by Melbourne with a -3.6 per cent reduction in values. Over the past three months capital city dwelling values are up 0.7 per cent, the lowest rolling quarterly rate of dwelling value appreciation since the three months ending June 2013.

Over the growth cycle to date, which commenced in June 2012, capital city dwelling values are up 13.9 per cent. According to Mr Lawless, the surge in values has largely been driven by strong market conditions in Sydney (+21.1 per cent). 

“The month-on-month fall in capital city dwelling values is likely due in part to seasonal phenomenon, but may also be indicative of a broader trend towards cooler housing market conditions.   Historically, housing market conditions have softened in April and May as the market rebalances from what is typically a seasonally strong first quarter and also as a results of cooler climatic conditions during the autumn and winter months. Outside of the seasonality, we have been seeing signs that the housing market is at or approaching the peak of the growth cycle.  The rolling quarterly rate of growth peaked in August last year and we have been seeing weaker auction clearance rates since late February when the capital city clearance rate hit 76 per cent,” Mr Lawless said. 

By way of its cycle, Australia’s housing market has shown that a growth phase usually lasts around two years. Mr Lawless said that with affordability becoming more challenging and rental yields substantially compressed across Australia’s two largest cities, we wouldn’t be surprised if the growth trend moderated further over the year. 

A recent deterioration in consumer confidence reported in the Westpac/Melbourne Institute Consumer Sentiment Index shows that this factor may also be playing a role in the winding down of housing market conditions. 

According to the Index, consumer sentiment recently peaked in September last year and has since declined by 16.0 per cent. The May consumer sentiment results showed a significant fall away which can be attributed to the announcements made in the recent Federal Government Budget announcement.

Current investor risk is very much concentrated within the Sydney and Melbourne markets where investor activity has been the most concentrated,” Mr Lawless said. 

www.rpdata.com/indices 

The May RP Data - Rismark home value index results out today confirmed a fall in capital city dwelling values by 1.9% over the month which, according to RP Data research director Tim Lawless, can likely be attributed to both seasonality and more moderate housing market conditions. 

Brisbane apartment prices (to 31 May 2014):

May 2014 - down 1.2%

Quarter - down 0.1%

Year to Date - up 1%
Year on Year - up 3.4%
Median price based on settled sales of Brisbane apartments over the quarter - $385,000

Half A Million

Thank you to readers and contributors.  This blog has just passed 500,000 page views.  And that does not include page views from the predecessor blog.  Thank you!

Skyring Gasworks Newstead

Tom Dooley (TDD) is launching their Skyring development at the Gasworks site in Newstead (30 Festival Place).  This area is a popular development area at present, with FKP, Devine, Mirvac and Metro all with off-the-plan and completed developments in this area.

The development has 23 floors, with 11 apartments per floor.

TTD is has a chart on their website, representing what rents they believe will be achievable.  Some examples from the 10th floor:

• Two bedrooms - 82 sqm internal, 20 sqm balcony - $660 per week.
• Two bedrooms - 69 sqm internal, 18 sqm balcony - $590 per week.
• Two bedrooms - 105 sqm internal, 30 sqm balcony - $810 per week.
• One bedroom - 60 sqm internal, 17 sqm balcony - $525 per week.

Place Apartment Report

Place has published their "Current Market Report - Inner Brisbane Apartments - March Quarter 2014".  Link is here.

The report focuses on new, off-the-plan apartment developments, and is worth reading.  Many people say that there soon will be an oversupply of apartments in Brisbane.  At present, it is taking longer to rent out apartments, so maybe the glut is already here.  Maybe there will be an oversupply of smaller rental apartments and an undersupply of apartments for owner-occupiers?

Some highlights from the report:

• The three months to March 2014 recorded 639 unconditional sales. Although this is not to the same level of transactions as the record breaking December Quarter prior, this is still almost twice the 10 year average of 326 unconditional sales per quarter.
• A weighted average of $710,524 was recorded during the March 2014 quarter. This is a figure 30% above the December period previously and representative of a higher level of owner occupier sales recorded in Inner Brisbane as opposed to any genuine price growth.
• The increase in local buyers has seen 52% of transactions recorded as two bedroom configurations.
• Despite this weighted average price rise, the 12 month rolling average price remains under $600,000, reflecting an overall longer term demand for affordable inner city apartments.
• One bedroom sales represented a further 40% of the quarter’s transactions, again the bulk of which transacted within the $350,000 and $450,000 price point.
• The distribution by price point was more evenly spread through the first quarter of 2014. The $350,000 to $450,000 price point still however retained the market share with 26% of the quarter’s sales.
• There were 1,225 apartments remaining for sale in Inner Brisbane at the end of the March 2014 quarter – The lowest level in 4 years.
• Overall, two bedroom apartments maintain the majority of current supply within Brisbane equating to 58% of the apartments remaining on the market. One bedroom apartments total only 29% of the available apartments for sale, and 3 beds represent only 9%.
• There were six new projects which recorded unconditional sales during the March 2014 quarter. These included Abian (CBD), Proximity (Hamilton), 38 High Street (Toowong).
• The best performing projects in Brisbane during the quarter were Abian (108 transactions), Broadway on Anne (58 transactions), Southpoint (46 transactions), Proximity (45 transactions), and 38 High Street (44 transactions).

Admiralty Towers One

From a recent Ray White report by Colin Walsh:

"Admiralty Towers 1 continues to be one of the Brisbane CBD's most sought after resident apartment buildings with the recent complex improvements adding a fresh appeal.  Seven sales were recorded in 2013 with prices on the incline.  For the first time in a couple of years, there are two D Type apartments sold for $880,000 and $900,000.  This illustrates that buyers are sawing new opportunities in the complex and are prepared to meet seller's demands."

The D Type apartments are two bedroom, two bathroom apartments, and are over 130 sqm in size.  Apartment 44 is a D Type, and went to auction recently but did not sell at auction, and is now listed for sale for "over $825,000".  This looks like a great deal.  This apartment is one of the best two bedroom apartments available in Brisbane.

Admiralty Towers 1 is direct riverfront, located at 35 Howard Street.

Lazy Agents

I always find it surprising that some agents work really hard, and others just fumble around.  I have been in the market to buy recently, and it is amazing how many agents just don't return calls or emails, and don't follow up.  I feel sorry for their sellers.

Small Apartments

In today's AFR (Australian Financial Review), there is an article titled "Size rules could hurt apartment market".  The article states:

• Property investors are being warned that banks may not finance "popular micro apartments" currently being built.
• Cookie-cutter apartments that are less than 50sqm in size are not cutting it with lenders.
• Apartments between 40 and 50 sqm are being marketed as accommodation suitable for foreign students.
• There is a disagreement between developers and surveyors about how to determine an apartment size (measured from the outside wall or the inside wall).  Developers usually measure from the outside wall.

Keep in mind that a typical hotel room (bed and bathroom, no kitchen) is about 33 sqm.  A bedroom is about 12 sqm.  Older apartments are often in better locations and are larger than some of the newer apartments being marketed in Brisbane.  Over time, a typical two bedroom apartment in Brisbane has decreased in size from 132 sqm, to 116 sqm, to 110 sqm, to 95 sqm, to 85 sqm and now 75 sqm.

Two Tier Property Market in Brisbane?

Is there are two tier market in Brisbane for apartments?  Are Brisbane owners, investors and renters looking for one kind of apartment, but developers are building another kind of apartment for foreign investors?  Some commentators have said that there will be an oversupply of apartments in Brisbane. For a certain kind of apartment, that may be correct.  But for what Brisbanites want, there may be an undersupply.

Take Bowen Hills for example.  It is close to the city, but has very few local amenities.  It was a light industrial area, and with highways cutting through it.  It is not inner city, and too far to walk to downtown or the Valley.  There are no parks or restaurants or river views.  There are number of large apartment buildings being constructed in that area, with small one and two bed apartments.  A lot of the sales and marketing is targeted at foreign investors, particularly the Chinese.  But do locals want to live in these apartments?  They are very small, and the buildings are very dense.  There are very few owner occupiers in these buildings.

Some examples are Madison Heights (286 apartments) and Chelsea (195 apartments).  It appears that it is taking a long time to rent out or re-rent the apartments in these buildings.  Rents are being reduced, for example, to $485 for a two bedroom apartment.  I suspect that the rental market is saying that, for the location and facilities, you can do much better elsewhere, so the apartments are renting only if rents are very competitive.

On the other hand, river front apartments in Brisbane city, apartments in New Farm, and "normal" residential locations such as Indooroopilly (where very few new apartments have been added to the market in the past five years), appear to be selling well and renting quickly.  These apartments are often much larger (130 sqm compared to 75 sqm for a 2 bedroom apartment, for example), have a better location, have more owner occupiers, and there is not an oversupply.

I also wonder what rents and returns the investors in the new apartment buildings have been promised, and what they are actually receiving, and for how long the apartment sits empty not generating rent?

Will the rents hold up when it comes renewal time in six months or a year?  Will tenants stay on or move out?  The Chelsea is an example of a building that appears to have a number of apartments for rent; it completed in 2012, and received bad press at the time.  (An advertisement below from last year for Urban Edge at Kelvin Grove, settled last year, where apartments will be coming up for renewal about now.  Kelvin Grove is a much better location than Bowen Hills in my view.)

Kangaroo Point new apartment developments

If you want to buy an apartment off-the-plan at Kangaroo Point,  there are many options at present:

• Liberte, by Pradella
• Yungaba, by Australand
• Riverview Towers, by Metro Property Group
• Peninsula, by Tom Dooley, reported as sold out.

Gardens Riverside West End

Pradella is advertising apartments in its Gardens West End development (which is located behind Flow and Waters Edge) at the following prices:

• 1 bed, 70 sqm - from $399,000
• 2 bed, 2 bath, 93 sqm - $565,000
• 3 bed and student - $929,000

Pradella's apartments are often well-designed, and are often a decent size and quality.  I am not thrilled with this location -- too far from the shops and restaurants in West End.  But it is less than 3 km from the Brisbane CBD.

Proximity Hamilton

Peloton is developing Proximity Hamilton.  This appears to be located at the back of the Portside development, and is not direct riverfront (although the river and cruise ship terminal is nearby).  One beds from $330,000 and two beds from $495,000.  A "free" furniture pack is offered.  Looking at the website, it appears to be targeted at people in their twenties who like to eat but don't actually eat that much.

The largest apartment is a corner two bedroom:  82 sqm internal, with a 13 sqm balcony.  See floor plan below.  This looks ok, but there are only 4 of these apartments.   Most of the other apartments are small -- 50 sqm internal for a 1 bedroom (where I would expect at least 60 sqm to be reasonable size.)

Basse South Brisbane

A new development in South Brisbane, Basse, is being sold off-the-plan.  It is located at 14 Merivale Street.  The complex appears to have 1 and 2 bedroom apartments only.  The one bedroom apartments start at $339,000.  A two bedroom apartment is advertised at $539,000.  Buyers should take care -- this development is on a very busy road -- the off ramp for the Go-between Bridge.

April Index Results from RP Data

Brisbane apartment prices (to 30 April 2014):

April 2014 - up 1.9%

Quarter - up 1.4%
Year on Year - up 2.8%
Median price based on settled sales of Brisbane apartments over the quarter - $382,750.

Likely increased investor activity in Brisbane predicted

From RP Data Press Release:  "Gross rental yields on a typical Melbourne house are sitting at 3.3 per cent and Sydney gross yields are a bit higher at 3.7 per cent. According to Mr Lawless, such a scenario of low yields in these two cities suggests that housing values have moved out of step with rental rates which is likely to dampen some of the investor exuberance we have seen in both of these markets. I wouldn’t be surprised if Brisbane, where home values are much more affordable and rental yields are comparatively healthy, will start to see an increase in investor related demand based on Brisbane’s early stage in the growth cycle and comparatively healthy rental yields,” he said."

Urban Construct

South Australian based Urban Construct has acquired more than $100 million in development sites in Brisbane.  They have development applications in train for 2,200 apartments in South Brisbane, Newstead and Wooloongabba.  This includes:

• 611 Coronation Drive - 275 apartments
• 142 Montague Road, West End - 400 apartments
• Vulture Street, Wooloongabba - 240 apartments
• Ella & Chester Streets, Newstead
• Hope St, South Brisbane

Brothel in your building

There is an interesting article in Domain regarding a Sydney apartment building that became home to a brothel.  In Brisbane, a number of inner city apartment buildings are used by travelling escorts on a regular basis to see their customers.  Some of the escorts are Eastern European, posing as tourists.  Many are from Australia or NZ.  An example list of visiting tourists is here.

Based on the informal surveys I have done, the preferred Brisbane apartment buildings for travelling escorts are [X ]and [Y].  M on Mary is also popular.

If you reside in one of these buildings, you may find that your neighbour for a week is a busy busty blonde from Prague with many male friends.

For reference,  an old Commissioner's decision on this topic is here.

Update on May 8, 2014:

The blog received a letter of demand from a management rights owner, threatening a lawsuit.  As a result, the names of two buildings have been deleted from this post at the present time.  Before buying or renting in an inner-city apartment building, it is recommended to conduct appropriate investigations.

Vacancy Rate and Rents Fall in Brisbane

Recent Press Release from REIQ:

The majority of Queensland’s rental markets have returned to tighter conditions, according to the REIQ’s latest Residential Rental Survey.

REIQ CEO Anton Kardash said the survey, carried out in March across all REIQ accredited agencies, found that the majority of the state recorded lower vacancy rates compared to three months ago.

“Queensland is seeing a return to a tighter rental market,” he said. “Stronger tenant demand and a decrease in the availability of stock are the common themes across the State.”

In Brisbane, the overall vacancy rate for the metropolitan area was back down to 2.3 per cent, as seen at the end of September last year.  Excluding the spike recorded in December, the Brisbane vacancy rate has been around the 2 to 2.3 per cent mark for over 12 months now.  As expected, the Brisbane inner city rental market returned to a healthier vacancy rate following a spike in December.  This is reportedly the result of easing asking rents to ensure vacancies are refilled quickly and also to compete with the new stock on the market. ...

Despite increased investor activity across Queensland in recent months, local agents report an increased number of sales of former investment properties to owner-occupiers, reducing the overall rental pool in some areas.

Brisbane Apartment Prices Going Backwards

Don't let real estate agents or the News Corporation press (including realestate.com.au) hoodwink you.  The Brisbane apartment market is not booming.  In fact, it is going backwards.  Compared with inflation, not great capital gains.  If you bought at the peak, you are still 5% below, not taking into account stamp duty and real estate agent fees for selling.  So ignore the headlines and look at the detailed actual results (that is, Brisbane apartment prices, and not Australian housing in general or Brisbane house prices).

From RP Data:

"After a flat February result, the RP Data – Rismark Home Value Index finished the March quarter in a strong fashion with dwelling values rising 2.3 per cent over the month to post a 3.5 per cent capital gain over the first quarter of the year. Apart from Perth, every capital city recorded a rise in dwelling values over the past three months. Melbourne posted the highest level of growth at 5.4 per cent over the quarter with Sydney and Hobart also recording a strong result in the March quarter with values up 4.4 per cent and 4.7 per cent respectively.

According to RP Data research director Tim Lawless, half of all Australia’s capital cities are now posting record high dwelling values, with Sydney’s housing market showing the most substantial increase beyond its previous market high."

Brisbane apartment prices (to 31 March 2014):

March 2014 - down 0.7%

Quarter - up 0.3%
Year on Year - up 1.7%
Year to Date - up 0.3%
Median price based on settled sales of Brisbane apartments over the quarter - $368,000.

Brisbane Shows Promise?

From HTW's Month in Review:

Brisbane’s revival continues and the ongoing confidence in property will be one key economic driver as this year progresses. As a capital, we have fed off the regional mining boom. Anyone with major mineral digs out in the nether reaches on the state invariably had a head office based in the big smoke. As this sector of the economy finds itself weakening, there are quite a few property participants touting construction as the saviour.

At a recent presentation in Brisbane, demographer, Bernard Salt, was pushing some big population growth for major cities around the nation in 2014, and Brisbane was firmly amongst his favourites. If we see this goodwill translate into actual gains, then the rest of the year should firm up nicely for those in property.