Is Brisbane nearing the top of the cycle?

[Perp]

alexlee and Nth Brisbanite are spot on. It's nigh on impossible to pick the bottom, or even the start of the upswing, at the time that you're in it. Growth in Brisbane is certainly slower than it has been, but I don't imagine we're going to see falls in prices.

Since different time periods have different properties in the pool anyway, I think that any difference in prices is going to be too small to be statistically significant on a monthly or even quarterly basis. ie if the median for January in a suburb was $330K and the median in July is $325K, it's likely that sampling error will outweigh the effect of the market anyway. By the time you get a sample large enough for market forces to be more statistically significant than sampling error, the time to buy would have passed.

It really doesn't matter what "the market" is doing in terms of when to buy within a 1 or 2 year period; it only matters what you can negotiate on your particular purchase. If your vendor isn't aware that prices this quarter are going to be 5% higher than last quarter (and they can't know this yet because the data isn't available, and most vendors aren't that informed anyway), then they're not going to hold out for 5% more than they would have accepted last quarter!

Find a property that you think represents a good long-term prospect, and buy it.

 

[Rockstar]

I'm not in Brisbane but sth of the Gold Coast. A respected local agent reported to me yesterday that the market down here had suddenly gone cold and we have recently been rippling off SE Qld growth with strong capital growth in the past 18 mths. Anyone else in this corridor have up to date "on the ground" reports in the last week?
I agree that the fundamentals are still good throughout the region but time will tell how this will balance out with availability of credit and interest rate issues. Hopefully the RBA can control their levels of testosterone and relax for a bit.

 

[Andrew_A]

I'm not in Brisbane but sth of the Gold Coast. A respected local agent reported to me yesterday that the market down here had suddenly gone cold and we have recently been rippling off SE Qld growth with strong capital growth in the past 18 mths. Anyone else in this corridor have up to date "on the ground" reports in the last week?
I agree that the fundamentals are still good throughout the region but time will tell how this will balance out with availability of credit and interest rate issues. Hopefully the RBA can control their levels of testosterone and relax for a bit.

I think the data coming through over the next few months from the property markets will be very interesting. I'm very confused about what's going to happen.

It's not really testosterone from the RBA so much as mono vision, they seem to weight the 2-3% band the way they measure inflation very highly, so anything upwards of that needs to be stamped on regardless. It's possible that this expectation might need to be revised however if you have a look at the drivers of the higher numbers, commodity prices (especially oil which the demand of seems to be highly inelastic) and rampant money creation.

I'm watching the 90 day bank bills, auction clearance rates, CPI figures and any other tells I can get my hands on very carefully over the next month or so and am feeling like I might be forced to do some interest rate fixing. Even though I think it's a bad time to be fixing it's possible rates might go way higher in the future if the banks costs of funding doesn't moderate. I'm Jacks unbound skepticism about gurus who think they can forecast years into the future so as to accurately time fixing; but am fairly comfortable with the idea that the market can do lots of funky things that few people expect it to and you need to worry about your own risk control firstly and not the game of prediction.

 

[Nth Brisbanite]

I've just come back from talking to a representative at Australand in Carseldine (14km north of Brisbane). 3 house and land packages were put on the market starting at $529,000. They were sold out within 4 hours of release. He showed me the contracts and said that he still has a waiting list of unsatisfied customers. The 3 purchasers were all from interstate with incomes that are double the average.

I think that the market is going to flatten out in some price ranges (very upper and very lower) but don't forget, there are couples out there with very high incomes, who will continue to buy despite interest rate increases.

Australand has no land available for sale in the northside. They expect their next release will have a starting price of $285,000. This is 15% more than their stage 2 release.

 

[Gatoblanco]

I dont understand what you mean about "Imagine that this was 1990. The market is going to fall for 5+ years. In 99/2000, it wasn't CLEAR that the market was rising."
Are you saying it is CLEAR now the market is rising?
What happened in 1990? Sorry Alex I dont follow.
Thanks
Jesse

 

[Gatoblanco]

Can someone pls tell me where the data is about house prices?
Surely each month the state govt does a report about house prices that month or something like that?
It might be hard to tell the bottom of the market but surely with data one could get evidence that it was rising or falling and then wait until it stops falling and starts rising and then buy. Sure you may not get the bottom but you may avoid the top before it fell.
There must be data.. surely.

 

[alexlee]

I dont understand what you mean about "Imagine that this was 1990. The market is going to fall for 5+ years. In 99/2000, it wasn't CLEAR that the market was rising."
Are you saying it is CLEAR now the market is rising?
What happened in 1990? Sorry Alex I dont follow.
Thanks
Jesse

The early 90's: Recession. Double digit unemployment. Interest rates in the high teens. Assorted mayhem and havoc. The first half of the 90s was pretty crap for property in general. Many areas went backwards.

The situation was changing in the mid 90s as interest rates started to come down, but obviously nobody noticed because property still wasn't going up. By the late 90s, IN RETROSPECT, all the factors were in place for a boom, and one started. Falling interest rates, pent up demand from the 90s, then they put in new policies like the GST and the 50% CGT discount.

You said that if the market went down, you would wait until you saw clear signs that the market was coming back up. In the 90s, when would that have been? 95? 97? 2000? In retrospect, around 95, 96, 97 would have been the best time to buy, but was it CLEAR (which is your buy signal) that it was rising? Probably not, since by definition if it was clear everyone would be buying in.

You're basically saying you'll buy when you're certain the market is going up. It's NEVER that clear, and more likely than not you'll miss out waiting for it to become clear.

I'm not saying anything about the current market at all, since like all current markets, nothing is 100% clear. Brisbane, certainly, appears to be booming. But there are clouds on the horizon. But there were clouds on the horizon in the late 90s, too, when in retrospect the boom was already in the making. Internet crash, no resource boom yet, Asian crisis, etc.

Jesse, if you want complete certainty when investing, put your money in a term deposit.
Alex

 

[seank]

Hi guys

I have been reading that Brisbane has had the strongest growth over the past few years compared to other cities.

However there are other opinions that the growth may have been too strong that it may mean that it is reaching the top of the cycle too quickly.

I'm curious to hear what do people here think, would people still invest in Brisbane now? Is there much more growth left?

Cheers

I live in the Mount Gravatt area, and I can tell you the inner south area is still going strong. Brisbane is still cheap relative to other capital citys.
There are still plenty bargains to be found and many houses still under 300k still within 30k to the cbd.
I find anything priced right will go within a few days, only properties with crazy asking prices stay around.

Cheers
Sean

 

[Ausprop]

I must be on different mailing lists.. all I am hearing and reading about is serious danger of asset deflation.

 

[Noeyedear]

I must be on different mailing lists.. all I am hearing and reading about is serious danger of asset deflation.

Ausprop,
I am not on any mailing lists but I get around to different real estate agents and project builders in Brisbane during the course of my working day.

The majority are telling me even thought things have slowed a bit. The market is still moving. One project builder recently told me they sold 18 houses in Feb which was right up there.

I can understand what you are being told and maybe that will be the case in the coming months but no sign of it yet.

Cheers Bill

 

[mitta]

I work in the Civil construction industry, build estates and I don't see any slowing down of the new housing market around brisbane, not that it won't or is happening, but normally as soon as a Stage in complete it's normally sold out and the developers are pushing us for the next stage again and again.

Mark

 

[shermy]

For what it's worth, I was back in Brisbane last weekend for a party (now live in Melb).
On Sat afternoon I caught up with an old friend who has done very nicely for herself doing reno's and subdivisions around Banyo & Nudgee in the north. She keeps an eagle eye on her patch of Brissie and told me that there is a slight slowing down in the market. Instead of listings lasting 2 days they're taking a bit longer now. Still good bargains to be sniffed out though as she's about to go 'shopping' again.

Then on Sat night I went to a party in Camp Hill, which is southside and quite $$. One of the guests was a local REA. "How's business?" I asked. "Bloody booming" was the reply.

I don't think too much wind is coming out the sails just yet in Brisvegas...although there was a lot of wind coming out of the REA's mouth most of the night.