Apartment Glut coming...

Discussion in 'Property Market Economics' started by euro73, 14th May, 2016.

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  1. lost nomad

    lost nomad Well-Known Member

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    And apartments in Rinato St Peters (previously sold out)

    Listed by an out of area Asian agency
     
  2. gman65

    gman65 Well-Known Member

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    I have been thinking about this when I read this the other day:

    Another 274m tower set for approval

    Another large apartment block has been approved for Brisbane. Now despite all the negativity, and just about everybody predicting an apartment crash, they still want to go ahead with yet more. This baffles me still. So my thoughts were:
    • These guys with billions of dollars really have no idea, and just like throwing money away. I am doubtful on this, but it may just be the case?

    • They know something and have the inside word and influence that most do not. Is there future Government policy coming that these developers are privy to that most are not. Loosening immigration?

    • They are extremely confident that there is no such bust coming, which is obviously against nearly everything else you read.
    From my experience, if everbody is predicting something will happen, it usually never does, no matter how sound the original logic.

    I remember in Melbourne about 10 years ago, there was a mass of apartments built in Docklands that remained vacant for a long time. Everybody was talking about a huge crash then, yet a few years on, they continued to build many more towers at feverish pace, and they still are today.. Did they eventually offload all the stock so that eventually there was demand elsewhere? or did people actually get burned and it just got quitely swept under the rug? Obviously not enough did, or the developers/banks/etc would not have financed more. What happened there?
     
  3. emza

    emza Well-Known Member

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    17% estimated vacancy from water use study 'Ghost tower' warning for Docklands after data reveals high Melbourne home vacancies | theage.com.au
     
  4. wogitalia

    wogitalia Well-Known Member

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    Or they're confident they can offload the stock and move on with their profits in hand and they can see their window is narrowing so they're getting as much of it built and sold as possible!
     
  5. larrylarry

    larrylarry Well-Known Member

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  6. aushousingcrash

    aushousingcrash Well-Known Member

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    "Nomination" Sale there's a few now advertised in Melbourne. I'm going to start an index on that shortly.

    ...Everyone is underestimating today's new world. 'Pricing power' will be lost across almost all industries and sectors, apartments will trade for the Marginal cost of production plus 20% developer margin. You are talking $4000/sqm. Plug that into your calculators!
     
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  7. Skilled_Migrant

    Skilled_Migrant Well-Known Member

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  8. Coastal

    Coastal Well-Known Member

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    Would this impact established units say in blocks that are about 20 - 40 years old?
     
  9. Ed Barton

    Ed Barton Well-Known Member

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    Of course
     
  10. John Ferguson

    John Ferguson Well-Known Member

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    In an interview with Ross Greenwood the other day, Australia's newest wealthiest person (BRW) Harry Triguboff said there is no apartment oversupply and that migrants will meet the supply of apartments. Lol.
     
  11. hammer

    hammer Well-Known Member

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    There is an apartment glut up here in Darwin. We're already a few years down the road and it ain't pretty.

    I can only hope that Syd and Melbourne's gluts don't end up like the disaster that is unfolding up here.
     
  12. BB5

    BB5 Well-Known Member

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    Maybe in the short term, but often these older apartments are far bigger and better built, with less units and lower body corp. I think sitting on an older Unit will pay dividends around Brisbane in some areas. The real people who will get smashed are Units further out and houses too in my opinion, because the built up areas will become desirable areas to live with amenities and infrastructure.

    Location Location Location...
     
  13. Coastal

    Coastal Well-Known Member

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    inner city Brisbane has a ton of these older unit blocks. Maybe a 10 - 15% drop in prices once the full extent of the glut is on the market.
     
  14. Beano

    Beano Well-Known Member

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    Maybe we will finally be able to buy units that will generate a net income over costs (based on 100pc borrowing)
    Personally I feel us investors need to have a hundred dollar profit per week over cost.
    Something we have not been able to achieve
    Looking forward to the glut!
     
  15. Ted Varrick

    Ted Varrick Well-Known Member

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    If I was a strata manager I would probably be working on a marketing campaign after reading this thread...
     
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  16. big max

    big max Well-Known Member

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  17. big max

    big max Well-Known Member

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    And before anyone else says it "yes, well a developer would say that" :).

    Having said that, Harry has in the past made various calls in prior cycles saying there was oversupply, so perhaps he has some cred. But obviously what a developer says is largely from a position of self interest.

    My view specifically on Gold Coast is that glut or not, the apartments will be filled. If there does become a glut prices will fall. And if they fall they will reach a level where they are rented or filled of end users. The more people on the coast the bigger the Gold Coast economy becomes in terms of spending, jobs, professional services etc. And the bigger the economy and population base the larger in demand (and price) will be for free standing houses in prime locations (which as a % of total accomodation supply will get smaller and smaller.
     
  18. MTR

    MTR Well-Known Member

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    We have already had a 10% drop in Perth, not sure whether it will continue but its not looking pretty at the moment.

    MTR
     
  19. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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  20. big max

    big max Well-Known Member

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    Ha ha yes, hence my additional comment I made:

    "Obviously what a developer says is largely from a position of self interest.

    My view specifically on Gold Coast is that glut or not, the apartments will be filled. If there does become a glut prices will fall. And if they fall they will reach a level where they are rented or filled of end users. The more people on the coast the bigger the Gold Coast economy becomes in terms of spending, jobs, professional services etc. And the bigger the economy and population base the larger in demand (and price) will be for free standing houses in prime locations (which as a % of total accomodation supply will get smaller and smaller
    ."