Signs of housing revival in Brisbane in September

[Nth Brisbanite]

I saw the following article in The Sunday Mail (Qld) today: As all my properties are in Brisbane I hope that the author is right in his optimism.

REBOUND: The median house price in the capital cities fell in September but was still the strongest monthly performance since February.

ARE we seeing the green shoots of a Brisbane property revival? For the first time since April 2008 on a quarterly basis, Brisbane's housing market outperformed the capital city benchmark.

September was the best month since June last year, according to the RP Data-Rismark Home Value Index released last week.

Sometimes less is more.

The median home price in the combined capital cities benchmark fell by 0.2 per cent in September, but it was still the strongest monthly performance since February.

The median price fell by 1.3 per cent during the quarter and was down 3.4 per cent on an annual basis.

Adelaide joined Brisbane in having a slight increase.

Brisbane's most affordable suburbs were the poorest performers in the past year whereas the premium sector showed more resilience. This is in direct contrast to most other capital cities.

The unit market continues to do better than the more expensive detached housing market. The median unit price rose 3.2 per cent in September and by the same amount in the quarter.

Brisbane cheapest as home prices fall
BRISBANE'S median house price has dipped to become the lowest in mainland Australia for the second time this year.

Brisbane houses cheapest of capitals
THE devastating floods on top of years of economic decline have made Brisbane houses cheapest of the mainland capitals.

City rentals set to grow

RENTAL growth in most capital cities is likely to increase as first-home buyers remain inactive, consumers remain cautious of debt, building approvals continue to ease and the affordability of homes is stretched because of above-average mortgage rates. End of sidebar. Return to start of sidebar.
On an annual basis, unit prices have fallen 0.9 per cent. House prices were flat in September, down 1.8 per cent in the quarter and 7.1 per cent lower in the past 12 months.

The apparent improvement in the housing market is tempered by other factors.

Dwelling sales in August were estimated to be 35 per cent below the five-year average and this has not changed much.

The number of properties advertised for sale in Brisbane is 15.2 per cent higher than the same time last year.

Now the Reserve Bank has cut interest rates by 25 basis points, we may see some positive sentiment return to the housing market.

 

[Don K]

I think some of Melbourne based investors are looking at QLD. Much cheaper up there and rental yield is better. Also it is surely time for all renters in QLD to buy as their mortgage repayment would be more likely lower than rent.

 

[Nth Brisbanite]

I think some of Melbourne based investors are looking at QLD. Much cheaper up there and rental yield is better. Also it is surely time for all renters in QLD to buy as their mortgage repayment would be more likely lower than rent.

As the coal seam industry comes on stream, we'll see a change in sentiment in Brisbane. Read that the take up in CBD office space has ramped up over the last few months with companies such as Santos and BHP moving in.

 

[Icarus]

I think it'll take a bit more than positive spin to turn the Brisbane property market around. Just on 30% auction clearance rate last weekend apparently; still a long way to go till we get back to the good old days.

Don, even if the Brissie house/unit prices are lower than the southern states, it'll still take a fair bit more of a drop in interest rates/house values before a mortgage payment becomes anywhere near what it costs to rent.

 

[Don K]

Don, even if the Brissie house/unit prices are lower than the southern states, it'll still take a fair bit more of a drop in interest rates/house values before a mortgage payment becomes anywhere near what it costs to rent.

Probably not inner suburbs but middle – outer suburbs are getting close I think. Especially if you can put 20% deposit. There are too many listings so I agree it will take a while to balance supply and demand.

 

[Angel]

Don, even if a townhouse in an outer suburb sells for $300k, the repayments would be about $600 a week. Come on, they rent for $250 - $300 a week.

BTW, what interest rate decrease? Have any of your banks lowered their IRs? Mine haven't.

 

[YPG]

Don, even if a townhouse in an outer suburb sells for $300k, the repayments would be about $600 a week. Come on, they rent for $250 - $300 a week.

BTW, what interest rate decrease? Have any of your banks lowered their IRs? Mine haven't.

I don't know if I necessarily agree with your rental assessment, because why would anyone who was unsure about their ability to afford an investment property buy something with a rental yield on 4.3% in this market in Brisbane?

With the amount of supply and discounting recently, I have seen plenty of properties in brisbane around the 280-300k mark renting for $340+ per week.

One that I have recently looked at for my parents was:
http://www.realestate.com.au/property-unit-qld-auchenflower-107606335

Assuming you could get it for 270k or less and it has been rented in the past for $330 per week (RE confirm). That's over 6% yield (not inc body corporate - which i think was $20-30 for small complex, i can't remember exact number re quoted).

With this exact unit selling for 307k last year in June - looks to be a little undervalued.

With a 20% deposit on this, making fortnightly payments, IO with offset account - worked out parents would only be out of pocket a few dollars every week due to continued payments to offset account - which is optional anyway.

So I still think there are some options out there in Brisbane.

However we decided to hold on for a while and consider some regional towns for a house for the same kind of money + would prefer a property with 2+ beds.

As Don mentioned I still think that this could be an affordable entry level with similar payments for rent, if you were to factor in, 20% deposit, fortnightly repayments, FHOG of 7k. Even if you had to pay an extra 50$ or so a week - maybe people would be willing to make this sacrifice to own their first place and hopefully see capital growth over the medium to long term?

I guess the big question is would people be able to scramble up 55k for the deposit.

 

[Bigtone]

Don, even if a townhouse in an outer suburb sells for $300k, the repayments would be about $600 a week. Come on, they rent for $250 - $300 a week.

BTW, what interest rate decrease? Have any of your banks lowered their IRs? Mine haven't.

i dont know any banks that have not passed on a rate decrease.

repayments on a $300k purchase at 97% lvr would be closer to $375pw, where do u get $600pw from? still a gap but no where near what u r saying

 

[Don K]

In Brisbane 6%+ yield is not hard to find. In outer suburbs even 7%+ is not too hard.

Brisbane finally recorded 0.4% growth in value according to rpdata. Also rent has gone up by 4.8% for house and 8.4% for unit over the last 12 months. With the current level of supply and prediction of RBA’s further rate cut it will attract buyer’s activities from both investors and renters I think. Once rate is down further it may be too late to find a good buy. That’s how I see it anyway. Any opinion?

 

[Don K]

BTW, what interest rate decrease? Have any of your banks lowered their IRs? Mine haven't.

Some are dropping in Mid November. And rate tracker type loan will be adjusted about a week later. They are slow when it comes to dropping rate.

 

[Andrew_A]

In Brisbane 6%+ yield is not hard to find. In outer suburbs even 7%+ is not too hard.

Brisbane finally recorded 0.4% growth in value according to rpdata. Also rent has gone up by 4.8% for house and 8.4% for unit over the last 12 months. With the current level of supply and prediction of RBA’s further rate cut it will attract buyer’s activities from both investors and renters I think. Once rate is down further it may be too late to find a good buy. That’s how I see it anyway. Any opinion?

Just opinion but.. definitely more enquiry from buyers since the rate cut, some long term watch and wait people have decided to jump in as well.

Too early to tell at the moment, just educated guessing, good to see Brisbane record a good growth month at least, it's been a very lean time so far this year.

 

[Angel]

Appologies, I thought we were talking about renters purchasing their first home to live in, not as an IP. The $600 per week was accounting for P and I, based on memory rather than opening up a loan calculator. I dont work with or socialise with any renters who have a spare $50+K lying around for a decent deposit. I recall a little mental calculation I learnt some time ago that said that for every $100K borrowed, the repayments are $200 a week P&I.

I was also thinking about where my townhouse is located, not in the Brisbane LGA but a wee bit further out. Another townhouse in the same building (there are only five), was on the market for an eternity earlier this year. I dont know what it sold for or even if it was withdrawn. But it was vacant for several months and was last advertised for $275 a week when our lease renewed for $315.

When investors talk about a city, do you mean just the LGA rather than all the other suburbs that are nearby, which as a local I think of as being a part of the same place?

I need to learn more before I open mouth, hey.