Dear Valued Friends, Associates & Clients,
The following is an Article from the Property Observer for your perusal and information:-
Brisbane house market at five o'clock and yet to bottom out: Experts
By Larry Schlesinger
Thursday, 12 April 2012
As the house price growth figures from RP Data show, Brisbane’s housing market continues to fall.
House prices were flat over the final quarter of 2011, according to figures compiled the Real Estate Institute of Queensland, which says that one year on from the floods, the housing market is showing signs of stabilising.
Michael , Louis Christopher and Charles Tarbey all believe Brisbane has some way to go before it bottoms out.
“House prices in Brisbane have dropped for the last two years. Brisbane buyers are lacking confidence to re-enter the market and are sitting on the sidelines waiting for signs that the market has bottomed before they make a purchase,”.
“This may occur later this year as Brisbane prices stabilise. Prices are unlikely to start rising until the second half of this year or 2013.”
Time: 5 o'clock
Christopher says the market does not “not look as dark” as it did in mid-2011. “Stock levels have peaked a bit, but there is still a fair amount of stock on market. It’s not as bad as Melbourne, but not as good Sydney.”
“Brisbane still has an oversupply of properties over this time last year, which continue to linger.
“Once mortgage repayments reach parity with rental payments, I suspect the market will move quickly to seven or eight o’clock [and into an upswing],” says Tarbey.
Population: 2 million
Median house price: $435,000
House price growth in February 2012: -0.4%
Annual house price growth to December 2011: -6.8%
Annual house price growth to July 2011: -7%
Rental yield: 4.7%
RP Data have reported their March quarter house price index results and the findings were encouraging.
Once again, the latest stats will disappoint the doomsayers who frequent the property forums and for the last four years have been predicting an apocalypse.
What the stats show
Overall Australian dwelling values were unchanged across the eight capital cities over the first three months of this year. In fact, RP Data-Rismark’s hedonic index data suggest that Australian dwelling values have not budged at all since the end of October 2011.
The tide is turning
Of course there is not one property market in Australia, so while the market is flat in general there are markets within markets, each pulled by a multitude of influences and, as a result, sectors within sectors are performing at differing speeds.
City | Index results as at March 31 2012 | |
| Median dwelling price | Change in dwelling values March 2012 qtr |
Sydney | $525,000 | 1.1% |
Melbourne | $465,000 | -0.8% |
Brisbane | $400,000 | -0.4% |
Adelaide | $370,000 | -1.5% |
Perth | $445,000 | -0.7% |
Hobart | $340,000 | 7.3% |
Darwin | $470,000 | 3.9% |
Canberra | $529,975 | 0.0% |
Capital city aggregate | $445,000 | 0.0% |
Source – RP Data
Clearly our property markets have slumped over the last 12 months, as the following table shows, but the latest results suggest we are now in the consolidation phase of the property cycle.
Brisbane
House prices in Brisbane have dropped for the last two years and are now 11% below their peak, but there are tentative signs of improvement in this market.
However Brisbane buyers are lacking the necessary confidence to re-enter the market, instead sitting on the sidelines waiting for signs that real estate has bottomed before they make a purchase.
Vacancy rates have fallen to 2.2% in December 2011 from 3.7% fifteen months earlier, suggesting that the market is working through an overhang in supply, and there is evidence that investors as well as owner-occupiers are slowly returning to the market.
The prestige end of the Brisbane housing market is suffering, but more affordable homes within 5- 10 km of the CBD are likely to perform well when the upswing eventually takes place.
One area of opportunity is the established apartment market around Auchenflower and Toowong, where you can find 1970’s and 1980’s apartments with good size rooms, close to amenities and within a brisk stroll to the CBD.
Increasing confidence with a new state government and an upswing in economic conditions, along with improved affordability, suggest that prices should stabilize over the next six months before starting to edge upwards.
However there are a large number of off-the-plan apartments available in the Brisbane CBD and surrounding suburbs. Many of these remain unsold, and this oversupply of properties will put downward pressure on prices and rentals in these suburbs.
Many of the apartments that have been sold off the plan are coming on stream in the next few years and have been purchased by investors. Some will have difficulty getting finance and settling their purchase. Others will be disappointed to see the end value of their properties is less than the original purchase price.
ack and some areas of the Perth market are likely to turn around later this year or in 2013.
What next?
We’re entering the stabilization phase of the property cycle, where buyers are returning and slowly taking up available stock, but not really pushing up prices yet.
This means our property markets are likely to remain soft this year, but should keep consolidating.
One encouraging sign is that first time buyers are back, applying for loans at levels not seen for two years. Remember, first time buyers are typically a good barometer for changes in affordability.
How soon things turn around will depend a lot on buyer confidence, and this will depend upon what’s happening overseas, how our local government performs and what happens with interest rates.
Does this mean you should put your money under the mattress or buy gold bullion rather than invest in property?
Property is more than just an investment – it is a fundamental human requirement. Everyone needs a roof over their head, whether they rent or own their own home. As a basic necessity, housing will always be in demand – it will always have value because we simply can’t live without it.
The long-term future is assured for those who invest in property.
At some stages in the economic cycle property values will rise strongly and at other times they will languish. When people can’t afford to buy property (when price growth slows because of decreased demand), people end up renting; so investors win by getting better returns. And that is currently happening as rents rise strongly.
Of course…this also means that buying any property and hoping it will make a good investment just won’t work at this stage of the cycle.
You need to buy the right type of property…
One that has a level of scarcity, meaning it will be in continuous strong demand by owner occupiers (to keep pushing up its value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long term averages), at the right time in the property cycle (that would be now in many states) and for the right price.
Best Regards,
Linda & Carlos Debello
LJ Gilland Real Estate Pty Ltd
http://twitter.com/GillandDebello
http://au.linkedin.com/lindajanedebello
http://www.facebook.com/pages/LJ Gilland Real Estate Pty Ltd
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