Brisbane is at or close to bottom of property cycle

[rchad]

Keen to start a conversation about Brisbane - interesting market; nothing is black or white; I have noticed that the post war homes on good blocks eg. Stafford/Chermside as some examples becoming more affordable and in many cases cheaper than new apartments in the same area (Chermside as one example); overall the inner city apartment market still appears strong eg. Bulimba/Hamilton yet may homes currently for sale have dropped back in value; I do recall Michael Yardney writing about mini cycles existing across suburbs rather than looking at a large capital city as simply one cycle. Interestingly, althought Brisbane is cited as being at the bottom of the market (demonstrated by values dropping back slightly overall) I appear to be experiencing good CG from off the plan purchases made during early 2009 in inner city areas (such as Hamilton Harbour) and Bulimba in 2010 based on current valuation estimates


What are your thoughts about where Brisbane sits on the property market?

 

[willair]

Keen to start a conversation about Brisbane - interesting market; nothing is black or white; I have noticed that the post war homes on good blocks eg. Stafford/Chermside as some examples becoming more affordable and in many cases cheaper than new apartments in the same area (Chermside as one example); overall the inner city apartment market still appears strong eg. Bulimba/Hamilton yet may homes currently for sale have dropped back in value; I do recall Michael Yardney writing about mini cycles existing across suburbs rather than looking at a large capital city as simply one cycle. Interestingly, althought Brisbane is cited as being at the bottom of the market (demonstrated by values dropping back slightly overall) I appear to be experiencing good CG from off the plan purchases made during early 2009 in inner city areas (such as Hamilton Harbour) and Bulimba in 2010 based on current valuations.

What are your thoughts about where Brisbane sits on the property market?

It may take a few years in some flood area's going by the latest State Government rateable land Values,the only way to understand Brisbane within the 10klm from the CBD is several markets within markets,one small area may go from 812sqm's,where you can only build a 3 level wal;k-up,to above 12 floors that's happening right now,but one item to keep in theback of your mind with "OTP" is value means stuff all until the contract is dry,and the money is in the bank,very easy to buy these days
but try and sell at your price you think it's worth,that's when the ##it starts to hit the fan..

 

[rchad]

It may take a few years in some flood area's going by the latest State Government rateable land Values,the only way to understand Brisbane within the 10klm from the CBD is several markets within markets,one small area may go from 812sqm's,where you can only build a 3 level wal;k-up,to above 12 floors that's happening right now,but one item to keep in theback of your mind with "OTP" is value means stuff all until the contract is dry,and the money is in the bank,very easy to buy these days
but try and sell at your price you think it's worth,that's when the ##it starts to hit the fan..

Very informative post; thank you - your last comment is correct - we have worked hard to achieve our required conditional finance based on very very conservative rental estimates given by us (not what spruikers tell you you will get) and are in for the long haul not intending to flip or sell for years

 

[china]

Flood prone

I would be most wary of buying in flood prone areas due to the stress and likely long term devaluations.

 

[rchad]

I would be most wary of buying in flood prone areas due to the stress and likely long term devaluations.

Correct I agree; we were very fortunate as both properties were not impacted by floods - river wider near mouth of sea where they are situated; we have made a note to not buy in flood zone areas

 

[Michael Yardney]

Yes rchad

There are cycles within cycles.

While the general Brisbane market is flat and probably has some time to go before it picks up (there's nothing on the horizon to suggest this will happen for 12 months), there are some suburbs where demand outstrips supply and where there is still strong capital growth.

Some suburbs that had double digit capital growth last year include: Manly; parts of Morningside; parts Wavell Heights, some areas in Mitchelton.

Of course not all properties in these suburbs would make good investments.

The Brisbane market is very fragmented, but I think you're right - there are some good opportunities there if you have a medium term perspective

 

[russellpeter]

I tried to buy this last 3 bedroom house in Yeronga last week

http://www.realestate.com.au/property-house-qld-yeronga-107409832

I seen the property in December before the floods and appraised it for rent at $400 to $430pw

Sold for $450,000 but fell over due to the floods

Just came back on the market last week at $320,000 and sold for just below this price.

I estimated a cost of less than 8K to get livable again and valued the property between $370,000 and $400,000

The reason they are selling so cheap is the old owners just got the insurance check of $80K and wanted to wipe there hands of it

Yes you take a risk buying in these areas but you are still buying in a good area less than 8k to the city and have instant equity.

There has been a couple of other properties that have just popped up for sale in the area for the same price but need a lot more work

Will be an interesting couple of months now that the insurance checks are coming in.

PS if you are looking to buy something like this do your homework and have cash I got done because of a cash offer with a 6 day settlement.

 

[cu@thetop]

I got done because of a cash offer with a 6 day settlement.

Never mind- next time put a small deposit with 6 day settlement and then ask for an extension and pay default interest- still gotta end up cheaper in the long run.

On another note: good to see you are posting again Michael.

 

[StefanA]

The faith you put in appraised values is risk carried by you and you alone.
REA appraised values are a large part of the reason "time on the market" has blown out in Brisbane.

There's nothing to validate we are in a cycle typical of the last 40 years, therefore nothing to forecast we are at the bottom of such a cycle.

The fundamentals are fundamentally different to anything since the AUD was floated and banking deregulation began.

 

[Andrew_A]

Property Clock for Brisbane & Other Capitals

Hi Rchad,

Residex have the Brisbane median down 7.4% from it's 2010 peak, fairly accurate indication of the greater Brisbane market I believe based on what I see every day, a large variation in performance around this figure of course and certain areas and market segments have done much better than others.

Always there is opportunity and some value adders are doing particulary well in this market, two fields of opportunity at the moment include.

1) Renovator stock: Much better deals now than 12 months ago simply because you can buy better and with less competition; and renovating is still a strategy working well.

2) Development blocks: With continued push for higher density and BCC allowing higher GFA in areas there are some impressive deals put together based on getting the highest use, a 3 townhouse block that is now a 4 townhouse block is more valuable as a result. This is a real trend that hasn't perhaps been picked up yet by the wider investing community, some of the applications council are allowing make me shake my head.

I have a report from a property researcher that attempts to place all capitals on a property clock, PM me if you would like some more info on that report. This property researcher has Brisbane at the bottom of it's cycle for what that's worth and he was previously quite bearish on Brisbane.

In the end all prediction is opinion, considered opinion perhaps but never fact. People who have a reasonably sound investing strategy and work towards implementing it consistently tend to do very well regardless.

 

[Tin Tin]

Hi Rchad,



2) Development blocks: With continued push for higher density and BCC allowing higher GFA in areas there are some impressive deals put together based on getting the highest use, a 3 townhouse block that is now a 4 townhouse block is more valuable as a result. This is a real trend that hasn't perhaps been picked up yet by the wider investing community, some of the applications council are allowing make me shake my head.


I bought a place in buranda (woolloongabba) 10 yrs ago and have almost bought the place next door. Council has advised that you can now build to 10 stories here which we are excited about. Not sure how much it will be worth but it is the first time i have made instant equity pretty happy.

 

[dash2011]

good opinion

In the end all prediction is opinion, considered opinion perhaps but never fact. People who have a reasonably sound investing strategy and work towards implementing it consistently tend to do very well regardless.

working towards consistency has always been my aim from square one.
that part just clarified it.

 

[willair]

I tried to buy this last 3 bedroom house in Yeronga last week

http://www.realestate.com.au/property-house-qld-yeronga-107409832

I seen the property in December before the floods and appraised it for rent at $400 to $430pw

Sold for $450,000 but fell over due to the floods

Just came back on the market last week at $320,000 and sold for just below this price.

I estimated a cost of less than 8K to get livable again and valued the property between $370,000 and $400,000

The reason they are selling so cheap is the old owners just got the insurance check of $80K and wanted to wipe there hands of it

Yes you take a risk buying in these areas but you are still buying in a good area less than 8k to the city and have instant equity.

There has been a couple of other properties that have just popped up for sale in the area for the same price but need a lot more work

Will be an interesting couple of months now that the insurance checks are coming in.

PS if you are looking to buy something like this do your homework and have cash I got done because of a cash offer with a 6 day settlement.

I drive past that one each day,and you would want to do your homework
on any of those floods jobs,plus the Banks don't seems to want to lend for those types of property,so it's a very good time to buy if you have the cash up-front ..

 

[redwing]

Brisbane seems to have copped it on the rental front also?

Link

CAPITAL CITY RENTAL GROWTH (12 months to March 31 2011)


Sydney +5.3%
Hobart +4.5%
Perth +4.4%
Darwin +3.7%
Adelaide +2.8%
Canberra +2.5%
Melbourne +0.9%
Brisbane -1.0%

 

[Ajax]

Residex report is pointing me towards Ormeau.

Any comments on this neck of the woods. Thinking house not duplex.

 

[Ed Barton]

Residex report is pointing me towards Ormeau.

Any comments on this neck of the woods. Thinking house not duplex.

are there any duplex's in Ormeau? it;s more gold coast than brisbane.

 

[Static]

In the share market history shows that if you pick the worst performing class of asset from the year before you'll achieve much higher returns than if you'd picked the best performing class. Obviously subject to the application of some common sense.

Brisbane's turn might not be next year but you'd think on a 'buy & hold' strategy it will come back strong. Whilst the population shift to the sun isn't as strong at the moment people are still coming.

Just a thought.

 

[Beanie Girl]

People are still coming to sunny Queensland!

Well, I can think of at least 3 groups of people I know who are going to the Sunshine State from the Garden State right about now.
A lovely family, lady and her daughter and son-in-law are shifting everything in Melbourne and going to live in the Whitsundays for good.

A nice young professional IT and his wife are exploring houses in Southside to buy and want to move as quick as they can to escape this miserable Melbourne winter.

I myself have an IP in Woodridge, which I wouldn't mind shifting up there and having a look around the suburbs around it for a PPOR. I have to sell my PPOR back in Melbourne though. I picked Woodridge last year as an IP as it was the North side, short drive to Springwood Shopping Centre and close to the happenings of the Springwood Master Plan which should bring development and office jobs to the area, right? Woodridge has got incredibly good transport infrastructure with trains to Brisbane and Gold Coast as well as buses to the city. With petrol prices the way they are and in future, I want to make sure I live as close to a train station or busway as I can. Finally Woodridge is 15 minutes away to Sunnybank where one can get a variety of Asian and sub-continent food. I always like diverse cultures and their food.

So people from southern states are still coming to Sunshine State from my circle of friends. I can't speak what the overall trend says though.

I hope I make Brisbanites happy with this news. I think they've suffered enough with the floods, tourism down and dollar biting our manufacturing. Oh yes, and the livestock ban. Cheeers!

 

[Nth Brisbanite]

There is a prediction in today's Courier Mail that Brisbane's median prices will rise by 15% over the next 3 years.

Has anyone got the link?

 

[INVSTOR]

. I picked Woodridge last year as an IP as it was the North side, short drive to Springwood Shopping Centre

it's on the south side!