What % of investors are buying Brisbane

[Jaffasoft]

Everyones talking about the boom in some Brisbane suburbs and Melbourne. This thread is about throwing thoughts into the wind and puzzling over questions and trying to learn why.

I've been puzzled over this for a while and wandering what really is the cause of this. It seems to early for a major Australian Boom over all, it was only yesterday that affordability was at 24 year highs and I don't imagine a boom hitting the mainstream Australia for a few years yet.

So why are Investors targeting Brisbane and Melbourne? It seems logical that Perth has gone off the boil and investors we're hovering around not knowing where to go or what to do and to where is next, now there going to Brisbane?

Obviously with tipping of the see-saw from stocks to property there might of been a small percentage of this going into property recently which might be the early birds thinking that the stock market has had a great run and they think is the next upswing of the cycle in the property.

I think another reason could be the fact that it has been a few years now since the last major boom finished they say 2003 so that's given people 4 years to be saving deposits and building equity and now looking for somewhere to buy.

And this is the main reason for my post! What percentage of investors are buying in Brisbane and SE Queensland that goes for Melbourne to and how does that compare to the percentage of investors to home buyers in other boom time statistics. Is there web sites with statistics of the percentage of investor buyers to home buyers at different stages of the property cycle?

It seems to me that this recent price increase in Brisbane which I think has been about 10-15% overall could be from just a serge of investors buying into wherever the hive decided to swarm to next and with the nice sun of Queeenland why wouldn't that also be a more compelling natural reason to invest in the sun shine state.

I'm wandering if this mini boom that everyone seems to be getting themselves worked up about is from more a percentage of those cashed up investors from the last boom and buying into somewhere?

 

[AnneDe]

Hi Jaffasoft,

Just passing on some observations regarding an auction held today in Rochedale South which is located in Logan on Brisbanes southern outskirts.

There were probably about 60+ people in attendance with at least 20 bidders holding the numbered bidding sticks. These bidders ranged from young families with babies, couples & singles without kids, trades people (as the property needed renovations) and retirees. Possibly 1/4 of the overall crowd was made up of locals checking out the auction.

All of the bidders were bidding for themselves except for one who was acting on behalf of someone else. The eventual winning bid was by the bidder representing the absent buyer (maybe an investor from interstate?????). There were 19 bidders that went away empty handed who will probably continue to house hunt adding more fuel to the Brisbane mini boom.

Cheers,
AnneDe

 

[Michael Croft]

Hi AnneDe,

A bit more detail to flesh things out please, assuming you were there.
Your $ guesstimate before auction? Actual price achieved? Bidding fast and furious? Slow and considered? Bids tappered off at $$? Any killer bid, or attempts?

Hi Jaffasoft,

The markets got me puzzled too atm. Lousy affordability, and yet prices climbing in what used to be considered the also ran areas. Have three income families entered the market (joking here I think)? No fall in interest rates on the horizon, no boom in wages growth, no rampant inflation, not a lot of rental growth, really poor returns, a change of fed govt a possibility. All in all, it ain't stacking up as a national trend.

Are these the investors (wishful thinkers) strategically placing themselves in front of a yet to happen market surge? If so, there's a lot of them and it's becoming self fulfilling. Without the fundamentals right, is this a bubble or two in the making?

I've only resurfaced recently after a 3 or 4 years sleep, still haven't got it figured. None of the classic indicators are right, except stability and low unemployment, and on their own, it ain't enough

MC

 

[AnneDe]

Hi Micheal,

In answer to your questions: as the house needed extensive renovations I would have thought $270,000 to $280,000 max would have been a fair price for the land value and locality. Price achieved was $308,500. Bidding jumped from 1st bid of $180,000 to blocks of $20,000 & $10,000 and tapered off to $1,000 increases after $290,000 was reached then to $500 increases.

The successful bidder only showed their hand towards the end after a duel between 2 other bidders was slowing down.

Forgive my ignorance, but I'm not that familar with all the auction terms but what is a 'killer bid'?

I have noticed though that there seems to be more properties in Brisbane and surrounds currently advertised as pending auctions, instead of having their prices listed as was more the norm 12 months ago.

On another note I also attended an auction a few ks from Noosa a couple of weeks ago not as a buyer but more to watch and learn. There were registered bidders but no bids were made. Only the auctioneer made vendor bids and the property was passed in at $600,000. The Sunshine Coast market has cooled compared to the Brisbane market.

Cheers,
AnneDe

 

[Les]

G'day Michael,

It's good to see you back here again, mate.

The markets got me puzzled too atm. Lousy affordability, and yet prices climbing in what used to be considered the also ran areas.

So right - particularly in parts of Logan. My PPOR cost $45k in 84, worth $95k in 89, then $75k in 92. Stayed in the doldrums until 2002.

By the end of the boom (early 2004 in this area) it was worth $200k and would rent for ~$230pw. Good enough, I thought - won't be much more growth in this place for the next several years..... (7% CG over 20 years)

WRONG !!! Kingston has gone crazy yet again, and I'm dumb-founded. Beggar all houses with 3bdr available today under $260k - and most everything is "Under Contract" when checking re.com.au

I know Bne is enjoying +ve population growth, and was under-supplied with houses, but hey - today, Kingston properties (25Km from CBD) are pushing to values that are getting close to Bayside suburbs, or 15Km properties. I can't see it lasting (but then, I also didn't see it coming either). I'm concerned this might end up as a repeat of 92 (dropping back to $200k or thereabouts this time). A false boom perhaps? But then, maybe it'll hit $300k then settle back to $240k while the rest of Bne goes nuts !!! Who's really to know?

Regards,

 

[Milan]

I have noticed though that there seems to be more properties in Brisbane and surrounds currently advertised as pending auctions, instead of having their prices listed as was more the norm 12 months ago.

Mortgagee sales perhaps? Banks preference I believe.

The Sunshine Coast market has cooled compared to the Brisbane market.

I think this market is overvalued.

M

 

[willair]

I'm wandering if this mini boom that everyone seems to be getting themselves worked up about is from more a percentage of those cashed up investors from the last boom and buying into somewhere?

Jaffasoft,imho as i only keep an eye on what is happening in the inner
southside from Rocklea to West End and from what i saw this afternoon
at the property 2 houses down from us, i counted 67 people that went
through the front door at the open house, the property was listed 4 days
ago i think it went on the net 3 days it will be up for auction in 3 weeks..
I know the two guys that live in the house and they told me tonight
that they have three contracts, one a cash offer the other two set up the
normal walkaway conditions the cash offer is above what they want..
They wanted my opinion all i said was, sometimes the first offer is always
the best, but in this market as Les has already said WHO KNOWS how far
the market will run this time,Brisbane is and always will be a market within
a market,and it's running at 10k a month in some areas ,the house is in West End future high rise development site..

good luck willair..
saladinx..

 

[Michael Croft]

Hey Les,

I understand that at $200k in 2004 there was room to move, particularly when compared to the other capitals, it was cheap. Even the RR at 5.25% was above the national average. But a run now, starting at 260-280k? And I bet the rents haven't moved by the same %. Got me beat - for the moment

Hi AnneDe,

Thanks for the fill in. A killer bid is a shock tactic at auctions. Let's say I had determined prior to auction, that to me it was worth $300k, and that to beat off the inevitable tail enders I might go to $302,500. Auctioneer calls for opening bids at $180k. Immediately and forcefully I bid "Two hundred and eighty thousand dollars!". People and maybe auctioneer are stunned for 30 seconds. Auctioneer regains control and solicits another bid, probably $285k. Immediately, and as before, I come back with "Three hundred thousand dollars". None of this, namby pamby index finger raising. If the auctioneer recovers and can get another 5k bid, I'm out, but at least I didn't waste too much of my time.

What do you think would be going through the minds of the other 'interested parties'? "This guys an idiot! He'll pay anything for the place" etc. Basically it's a tactic to unnerve the competition. Others arrive in very flash cars, strutting their stuff, lots of bling etc. trying to psych you out with their obvious wealth. Some combine the two.

Other's use an odd figure to throw you out of your comfort zone. With calculator/blueberry in hand, opening bid, "Two hundred and seventy eight thousand, three hundred and fifty four dollars". Say what? Then repeat it louder.

But I digress, the killer bid is also known as the knock out bid, as it knocks the other bidders out of the game. Does it work? Has for me and others on the forum. Depends a lot on the experience of the auctioneer and the other bidders.

All the best,

MC

 

[letiha]

Well we have just bought 4 blocks on the noth side of brisbane, onse settled a month ago the others will settle in about 10 days.

two blocks in the estate we bought in same size as ours next door came back onto the market, i was told that they are now under contract $40k more than the original contracts. The next release that is due in 6 or so weeks expects a similar jump in prices.

I think what is fueling it is just lack of properties. I was officially notified today that my rent will go up from $245 to $285 next month for a townhouse in Strathpine, so i'm moving it isn't work it. $40 in 6 months. i'll just have to make sure that can find somewhere else first.

 

[Michael Croft]

Hi leitha, your actions are pointing out the direction of the market I suspect. Your move due to perceptions of value, or lack thereof. With others it will be affordability. The demand may be there, but you've got to be able to meet the repayments.

I wonder what a 0.5% interest rate rise will do to the market - we are talking bottom to middle after all. This warmth in the market is just what the Reserve Bank sees as a trigger. How much of a buffer do you think these 'investors' or buyers are allowing, if any?

MC

 

[Chilli]

I have just paid "market price" for a block of strata uinits in inner Brisbane income is 6% and I think there are things I could do to increase rents further . Six months ago when prices started to move I was a bit worried that it could be a "bubble" and hesitated to get in, but seeing how crazy it has been I don't want to sit waiting and then pay heaps more for similar properties in 6 months time . I have already paid much more for this now - should have entered the market last November.... I won't know if this purchase is a right one or not till a few more years I guess !
Nervous investor

 

[letiha]

well we are happy with our purchases because we have seen an increase in value before we even settle.

I actually think the huge rental increases in Brisbane will encourage some into buying their first home because the difference is narrowing. I suppose its looking at the areas that you buy into. If its suburbs that have always done well are desirable places to live with transports and shops etc then you will continue to do well.

I think the reason that areas that are normally not so desirable (logan etc) are going up is because of people being pushed back from the closer suburbs because of affordability. I think the real question is where are the residents of these areas going now the prices for rents are increasing ???

 

[Raddles]

http://www.propertyupdate.com.au/articles/197/1/Follow-the-Sun

the above article seemed to make a number of comments which are relevant to this question
thanks

 

[eggnog]

If everyones so worried about the prices going up in brisbane/logan then why not look to buy out ipswich. Prices still quite cheap (personally I haven't seen this kind of price increases there). If the price rises in brisbane are a boom then the ripple effect will eventually hit ipswich. But if increases are a bubble and it bursts then price falls wouldn't really affect ipswich much coz they did not experience this frenzy.

Just a risk management plan and my 2 1/2 cents

 

[keithj]

I've only resurfaced recently after a 3 or 4 years sleep, still haven't got it figured. None of the classic indicators are right, except stability and low unemployment, and on their own, it ain't enough

Hi Michael,

I too have returned recently to SS after a long absence. This was prompted by improving yields, reports of growth in Melb & Bris. But I'm still waiting for the fundamentals to improve sufficiently to invest further.

Are these the investors (wishful thinkers) strategically placing themselves in front of a yet to happen market surge? If so, there's a lot of them and it's becoming self fulfilling. Without the fundamentals right, is this a bubble or two in the making?

The April ABS figures for investor finance haven't increased since 2003, while OO finance has shown consistent rises. See p8 here. So I'd guess it's not investors fuelling the growth.

Cheers Keith

 

[letiha]

Interesting reading June Property Investment Magazine, seems to be the opinion that Brisbane's had its run/

 

[AnneDe]

Hi AnneDe,

Thanks for the fill in. A killer bid is a shock tactic at auctions. Let's say I had determined prior to auction, that to me it was worth $300k, and that to beat off the inevitable tail enders I might go to $302,500. Auctioneer calls for opening bids at $180k. Immediately and forcefully I bid "Two hundred and eighty thousand dollars!". People and maybe auctioneer are stunned for 30 seconds. Auctioneer regains control and solicits another bid, probably $285k. Immediately, and as before, I come back with "Three hundred thousand dollars". None of this, namby pamby index finger raising. If the auctioneer recovers and can get another 5k bid, I'm out, but at least I didn't waste too much of my time.

What do you think would be going through the minds of the other 'interested parties'? "This guys an idiot! He'll pay anything for the place" etc. Basically it's a tactic to unnerve the competition. Others arrive in very flash cars, strutting their stuff, lots of bling etc. trying to psych you out with their obvious wealth. Some combine the two.

Other's use an odd figure to throw you out of your comfort zone. With calculator/blueberry in hand, opening bid, "Two hundred and seventy eight thousand, three hundred and fifty four dollars". Say what? Then repeat it louder.

But I digress, the killer bid is also known as the knock out bid, as it knocks the other bidders out of the game. Does it work? Has for me and others on the forum. Depends a lot on the experience of the auctioneer and the other bidders.

All the best,

MC

Hi Michael,

Thanks for the detailed explaination. I'll certainly have a better understanding and be prepared, if this 'shock' tactic is being used at other auctions in the future.

Cheers,
AnnDe

 

[Rixter]

Its rather simple why Brisbane is on the up....but Im going to let you ponder a bit more.... tip tho - think fundamental basics

 

[Michael Croft]

Aww, come on Rixter, put me out of my misery.

MC

 

[sue78]

WRONG !!! Kingston has gone crazy yet again, and I'm dumb-founded. Beggar all houses with 3bdr available today under $260k - and most everything is "Under Contract" when checking re.com.au

I know Bne is enjoying +ve population growth, and was under-supplied with houses, but hey - today, Kingston properties (25Km from CBD) are pushing to values that are getting close to Bayside suburbs, or 15Km properties. I can't see it lasting (but then, I also didn't see it coming either). I'm concerned this might end up as a repeat of 92 (dropping back to $200k or thereabouts this time). A false boom perhaps? But then, maybe it'll hit $300k then settle back to $240k while the rest of Bne goes nuts !!! Who's really to know?

Regards,

I think $260k for that area is market price and will not drop. When you consider tha land in that area has reached $160k just for a small block with bigger blocks probably reaching $180k.

I think in terms of location that area is brilliant. However, it's a bit rough...you can tell just by driving through. The quetsion is how do you change the image? there are houses there with banged up cars out the front yard.

Kuraby went through image rejuvenation. Median price in Underwood is $359k min with land prices up to $280k. Woodridge is only next door. I mean it's only about 8 mins drive from where I live in Runcorn and Runcorn land prices is $350k...and close to Stretton too. Then there are all the new shops around that area...bunnings and a home centre.

It's a good area and I would definately live there if there wasn't a high crime rate.

I would still buy for $260k in woodridge than say browns plains. It's a much better location, close to all the freeways, train lines, buses, Garden city, Ikea,
Sunnybank etc.

I've been trying to buy a t/h in woodridge for the past 2 mths. If anyone gets offferred one but decline then let me know plz. I am trying to pick up a 2br for around $150k. It's actually an investment for now but possibly a place for my mum to live if she decides to move to Brissy. I can't justify the price of $250k for a t/h in Runcorn when Woodridge is only a further 5 mins drive. The yield is better too.