29 posts tagged “value”
Usually, it is relatively easy to determine a value or price range for an apartment in a high rise building. This is because there are often a number of sales a year, and so if you can find an apartment with a similar floor plan that has sold (e.g., an apartment in the same line), that gives you a good starting point. Then, you can look at the difference in floor levels, and determine how the value is different.
"Brisbane Brisbane’s housing market has been
relatively subdued in comparison with Sydney and Melbourne. Home values
are up just 1.4 percent over the first half of the year compared to the
national increase of 4.5 percent. Despite the fact that South East
Queensland remains the population growth epicentre of Australia and the
city is home to some of the largest infrastructure projects in the
nation, growth in home prices has been relatively subdued. Market
conditions are improving, however, with houses and units taking just 29
days and 27 days respectively to sell. Brisbane’s unit values, at
$337,003, are the most affordable of any mainland capital city
providing a very strong value proposition to potential buyers."
RP Data
"Increases in rents have seen yields for Brisbane houses and units (at 4.4% and 4.9% respectively) increase, and
yields for houses are now back to levels last seen in 2002. This together with lower interest rates is starting to make
a more compelling case for investors, and counter cyclical investors are starting to return to the market."
"Prices did not peak until early 2008 and have only come back 5% since then. Whilst there is potentially further downside in the short term, the market is likely to stabilise and the high levels of demand are expected to see growth return once the economy starts to pick up. Brisbane has generally had high demand for apartments and units, and this means that the fall in prices for other dwellings has not been as much as for houses.
MLG Property Report - March 2009
"He said two factors in the past two months had prompted the downgrade of its residential inventory. He said there had been a "massive downturn" in the top end of the residential market. Secondly, the company had made a "conscious decision" to sell some high-end projects outright at a discount to their carrying value. Mr Quinn said: "The first home buyers are well and truly back because it is now cheaper to buy than to rent." Stockland had started to reconfigure some high-end projects to create more affordable products. "Traditionally, 20-25 per cent of our market is first home buyers. They now represent 45 per cent of our total buyer profile." He said sales had picked up nationwide." See The Australian
From RP Data's Property Pulse:
"Brisbane
Across
the 12 months to August 2008, Brisbane’s median house value has
increased by $21,915 although, the level of vendor discounting has also
increased
by 3.64%. Given this, vendors who sold in August 2008 would be $6,328
better off than if they sold at the same time last year. Brisbane’s
median unit value rose by $11,966 across the year to August 2008,
meanwhile an increase in the level of vendor
discounting of 3.09% has meant that a Brisbane vendor selling at the
median unit value would have been $2,410 better off selling this year
as opposed to selling at the median value last year"
A lot of people seem to think that it is the end of the world as far as property investment is concerned. These are my thoughts.
Facts:
- Interest rates are going down
- There is low unemployment in Queensland
- There are few vacant rental properties, and rents are still increasing in Brisbane
- According to REIQ and RP Data, medium prices have fallen less than 3% in the past 6 months, and over the past year prices have still increased
- Property is still selling. For example, a three bedroom apartment is Admiralty One sold in less than a week. At auctions in Mooloolaba this weekend, which has been a tough market, there were 2 two bedroom apartments that had bids of more than $1 million: Oceans 503 had a highest bid of $1,200,000; and Sirocco 604 had a highest bid of $1M.
- Banks are still lending money, but they have tighter lending requirements
- For most of Brisbane, there are very few delinquencies.
- In outlying areas (such as Forest Lakes and Springfield) and low quality bulk highrise marketed to investors (e.g., Charlotte Towers, and other recent Devine buildings), there are distressed sellers who are selling for less than they paid.
Assumptions:
- Matusik, who is a very bullish property consultant, has the following assumptions in most of his presentations, but I am not sure how many of them will turn out to be correct (and some from his September 2008 presentation are already wrong):
- interest rates to drop by 0.5% in fiscal 2009
- $A remains high – above 85 US cents
- migration to oz remains high US economy has a mild recession, mild recovery in 2009
- demand for our resources continues
- share market settles down unemployment remains below 5% and wages growth remains constrained
- Property in inner Brisbane will take longer to sell than over the past 3 years (e.g., time on market will return to a more normal period of time, from 15 days to 30 or 40 days).
- Prices for poor quality apartments will fall by 25%
- Prices for apartments that have their views destroyed (e.g., Charlotte Towers, 212 Margaret, River City, and some in South Brisbane) will fall by 25%
- Prices for apartments without carparks will fall
- Some new apartments for off-the-plan developments) are priced too high for what they are, and will have difficulties selling in the short term (e.g. Waters Edge, Empire Square, Vision)
- Anything priced over $6,000 per sqm will struggle to sell, unless it is really special
- Off the plan developments will not sell well until completion -- in uncertain times, people do not want to make bets on the future, especially where the product being sold is intangible -- people want to touch and feel in uncertain times.
- Really good stuff will sell, and will not reduce in price by more than 5% (if at all)
- In February 2009, the market will pick up, but will not have growth of more than 10% per year for at least two years
- Due to lack of building today, things will get better for investors in good locations in the short term
- This year, my property portfolio looks better than may stock portfolio.
"If inner city apartment living is your thing, there are a couple of alternatives worth your time. For an entry level option, try a one bedder with a carpark and a sale price around the $370,000 to $390,000 mark. The car accommodation can be sold or rented separately for a healthy quick return, or retained to take advantage of further growth. If you looking for owner occupier stock, lower level units in the old Admiralty Towers complex are hard to beat. While they may not have the flash-bang impact of some of the newer high rise projects, your home looks down both stretches of the river with easy access to both the city centre and the wilds of Fortitude Valley. $700,000-odd could be well spent here."
See http://www.htw.com.au/Downloads/Files/195_September_2008_Month_in_Review.pdf
"The difference in investor sentiment in the past few months has been extraordinary," Braxton Chase director Andrew Donnelly says. "The first thing many investors approaching us ask now is 'will the market implode?'. Many are clearly having difficulty understanding all the interpretations on where prices are heading."
Braxton Chase believes the reason is the frequent use of average and
median price data, which creates a broad impression that prices are
falling dramatically, but doesn't reflect localities that might be
performing well in terms of capital growth.
See The Australian. 16 August 2008
Monday, August 11, 2008
That’s the front cover headline of the September 2008 issue of Your Investment Property magazine. BIS Shrapnel predicts Brisbane will grow faster than any other capital city with the median house price to jump from the current $422,000 to $515,000 by June 2011. That’s a huge 22% increase in just 3 years!
Underpinning this strong growth forecast are several key factors:•
supply and demand – last year 90,000 people migrated to Queensland from
interstate and overseas. Approximately 44,000 new dwellings need to be
built next year to accommodate this rapid growth, however, only 33,000
are expected to be constructed, resulting in a shortfall of 11,000 new
homes
• higher rental yields – rents have risen 15-20% during the
past 12 months. Independent property analyst Michael Matusik predicts
rents will rise by a further 17% in the next 18 months
• lower
interest rates – we should see the first official rate cut in a month
or two, with several more reductions to follow during the next two
years
The bottom line is that regardless of whether you are
buying as an Owner-Occupier or Investor, now is the time to secure your
next property before prices take off again!
- Brian White, Senior Property Consultant, Prime Property Sales (Qld) Pty Ltd
Mr Mellor said home buyers should not expect a big decline in prices by the end of the year. "There may be a fall in prices before the end of the year, but it won't be more than 1 or 2 per cent," he said.
He added that it was a good time for buyers looking to upgrade to a bigger home.
"With a 10 per cent increase in the amount of people looking to rent, a figure that is expected to increase, it is a great time for investors." The financial markets are factoring in an interest rate cut, possibly as early as next month, but even without it, Mr Mellor predicted an upturn, so long as rates did not rise again.
"Common sense will win out in the end," he said. "Buyers will realise that all the fundamentals that make it a good time to buy are there."