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Apartment glut prompts massive discounting in Brisbane, research reveals

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Apartment glut prompts massive discounting in Brisbane, research reveals

PHOTO: New Brisbane apartments are coming in for heavy discounting, SQM Research found. (ABC: John Gunn)

A recent real estate advertisement revealed what some might call the bargain of a lifetime — a northern Brisbane apartment selling for almost 40 per cent below its 2010 purchase price.

The two-bedroom unit in Chermside is what property analyst firm SQM Research call a “distressed property”— bought for $522,000 and now on the market for $315,000.

In a more buoyant market, it might be enough to attract a long list of eager buyers, but with a rental vacancy rate of 3.3 per cent in Chermside the apartment has proven far from an easy sell.

SQM Research managing director Louis Christopher said large price falls have become the new norm for Brisbane apartment owners looking to sell in a saturated market.

“We have seen some heavy discounting before, but this is probably one of the biggest ones I’ve ever actually seen,” he said.

“It’s fair to say this is not normal in the market. Nevertheless, there has been an oversupply of properties — we see it through the rental market in the Brisbane CBD where we are recording rental vacancy rates of 5 per cent.

“We are noticing the vacancies in Brisbane are still elevated in the CBD and in the inner city market, whereas in the outer regions of Brisbane, we are recording tighter vacancy rates.”

Worst could be over, expert says

Mr Christopher said homeowners and investors might see their fortunes improving in coming months, as SQM data showed vacancy rates had been falling for the past four months.

“We noted the overall Brisbane rental vacancy rate is now at 3 per cent and has actually been dropping,” he said.

“There’s a chance now that the worst may actually be over when it comes to property investors in the rental market.”

Apartment glut prompts massive discounting in Brisbane, research reveals
PHOTO:
 Inner-city apartment vacancy rates remain high, Mr Christopher said. (ABC News: Isobel Roe)

Queensland population growing steadily

Australian Bureau of Statistics (ABS) data also suggested the state was enjoying steady population growth.

Marking the birth of the 5 millionth Queenslander yesterday, Premier Annastacia Palaszczuk said the two main drivers of the population increase were migration growth, particularly from New South Wales, and from 60,000 babies being born in the past year.

Apartment glut prompts massive discounting in Brisbane, research reveals
PHOTO:
 Is this Queensland’s 5 millionth person? Cordy Kerr-Kennedy was born yesterday in Townsville.(ABC News: Mark Jeffery)

“Overseas and interstate migration is up by 50,000 people in the past year, 19,000 came from interstate … more than 12,000, or 230 a week move from New South Wales to Queensland,” she said.

Mr Christopher said property oversupply was a problem mostly localised to Brisbane, with surrounding Queensland regions and other states recording much tighter vacancy rates.

ABS data also revealed the fastest and largest-growing area in Queensland in 2016-17 was Pimpama on the Gold Coast, which grew by 3,000 people.

Large growth also occurred in Jimboomba on Brisbane’s south side and in North Lakes — a suburb north of the city — which both increased by 2,100 people.

“On the Gold Coast, we’ve been recording vacancy rates well under 2 per cent and on the Sunshine Coast, the vacancy rate is once again under 2 per cent, strongly suggesting it’s been a landlord’s market in those two regions,” he said.

“When I look at the three main capital cities — Melbourne, Sydney and Brisbane — Brisbane has suffered the most in terms of an oversupply of units.

“Brisbane’s population growth rate has been falling behind Sydney and Melbourne and because of that, it hasn’t been able to absorb the surplus stock that’s been built, hence the reason why we’ve seen higher vacancy rates compared to Melbourne and Sydney.”

Source: www.abc.net.au

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Five Brisbane houses under $500,000 ripe to renovate to perfection

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Brisbane apartment valuations on the slide with thousands more units on the way

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Brisbane apartment valuations on the slide with thousands more units on the way

The large number of newly completed apartments – about 8300 – expected to hit Brisbane in 2017-18 will only worsen the problem, DFP says, quoting the latest residential data from property research group BIS Oxford Economics. A further 5000 units are in the pipeline for 2019. Yongyuan Dai/IStock

Mortgage revaluations of second-hand homes in inner Brisbaneare between 20 per cent and 30 per cent lower than the prices they originally exchanged for, one more sign of falling demand and over-supply in the Queensland capital, according to private property lender Development Finance Partners (DFP).
DFP, which provides commercial loans to residential developers, has discovered that not only are the values of new dwellings being pushed down, but secondary apartments and townhouses have been swept up in the downward slide.

The large number of newly completed apartments – about 8300 – expected to hit the city in 2017-18 will only worsen the problem DFP says, quoting the latest residential data from property research group BIS Oxford Economics. An additional 5000 units are in the pipeline for 2019.

According to BIS, the average number of apartments constructed in inner Brisbane outside of a boom year is about 2000.

DFP believes, based on information provided by its clients and industry experts, that the Brisbane apartment market will be further “tested” in the last half of the year.

“It’s a shock and it pressures those owners who do not have substantial equity,” DFP director Matthew Royal said.

“The new, shiny, state-of-the-art properties are easier to let and those owners, keen to get cash flow, may set a rental that is lower than rentals applying for nearby, older, properties.

“Making things worse is that, in a new development a large number of rental properties emerge at once, flooding the market,” Mr Royal said.

Adding to the woes of lower rents, banks are refraining from refinancing interest-only loans, forcing many borrowers to repay both principal and interest.

“Lower rents push down a property’s value, reduced cash flow arrives as principal and interest needs to be paid and an investor, financially comfortable up until then, is suddenly struggling to ‘hang on’,” Mr Royal said.

Additionally, Mr Royal is predicting more time on market for re-sales of apartments from the third quarter of 2018 onwards.

“Unfortunately I am predicting more pain than gain for the most exposed assets this time next year.”

It’s been two years since concerns about an oversupply of apartments in Brisbane began but many developers are understood to be still holding onto stock, hoping the dwellings will be absorbed by a growing population

This expectation of a gradual correction is supported by the relatively flat – as opposed to rapidly falling prices of Brisbane off-the-plan units, shown in settlement data from Corelogic.

But there are fewer projects in the city, with just 12 launched in 2017 compared with 57 in 2016.

Source: www.afr.com

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Hamilton Hill home of NASA inventor for sale for first time in half a century

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Hamilton Hill home of NASA inventor for sale for first time in half a century

This home at 29 Queens Rd, Hamilton, is for sale for the first time in over 50 years.Source:Supplied

THE Hamilton Hill home of a Brisbane inventor who helped put NASA into space has hit the market for the first time in more than 50 years.

Norman Flournoy, 88, has 27 worldwide patents to his name, including technical inventions used in ballistics and rocketry in the United States.

His wife, Marea Reed, worked from home as an optometrist for three decades and still has the original chair she used, which was made in 1876 from solid brass and bronze.

The 79-year-old hasn’t ruled out selling the chair with the house, but stressed it would have to be a good offer.

Hamilton Hill home of NASA inventor for sale for first time in half a century

The view from the back deck of the home at 29 Queens Rd, Hamilton.Source:Supplied

Mrs Reed moved into the home at 29 Queens Road in 1965 with her first husband, who was an architect.

“It was a wreck when we first came here,” she recalls.

“He did some beautiful, sensitive alterations to the house.

“It’s a wonderful mix of the traditional colonial and the new avant-garde.”

Perched high on Hamilton Hill on 890 sqm, the six-bedroom, two-bathroom colonial home is the perfect renovation project, offering spectacular river and city views.

Hamilton Hill home of NASA inventor for sale for first time in half a century

The living room in the home at 29 Queens Rd, Hamilton.Source:Supplied

“It’s got an absolutely fantastic view and position,” Mrs Reed said.

“What I love about it is the great expanse of sky.

“It’s a very happy home.”

Traditional features include a wraparound entry veranda, original timber flooring, wide hallway and VJ walls.

There is a large back deck, which extends off the living and dining area that would be perfect for alfresco dinners or parties.

Hamilton Hill home of NASA inventor for sale for first time in half a century

The hallway in the home at 29 Queens Rd, Hamilton.Source:Supplied

It overlooks the backyard, which allows plenty of room for a pool or home extension.

Underneath the home is a spacious studio with bedroom/lounge area and kitchenette — ideal for a guest wing or teenage retreat.

Marketing agent Nick Kouparitsas of Ray White Ascot said it was rare for such properties to be offered to the open market.

“We don’t come across too many of these homes that have been in the same family for so many years,” he said.

“Around Hamilton they’re pretty rare.”

Hamilton Hill home of NASA inventor for sale for first time in half a century

One of the bedrooms in the home at 29 Queens Rd, Hamilton.Source:Supplied

Mr Kouparitsas said he had fielded interest from local and interstate, mostly from owner-occupiers looking for something to renovate on a large block in a great location.

“You’ve probably got some of the best views in Brisbane there of the river and the city,” he said.

The property is scheduled for auction on-site at 4pm on May 26.

Source: www.news.com.au

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