Apartment oversupply hitting Brisbane

The media is 80% nonsense 20% entertainment.

Anyone who listens to the media to make decisions on real estate investments has no idea what they are doing.

The only thing the media is good to watch for is broad sentiment change because most of the herd are influenced by them and it gives the serious investors some good insight into the herd's psychology over a period of time.

Me 2 cents.

 

Barefoot investor mentions most of the 15,000 units prior to 30 June won't settle, only a couple of weeks to go until all these fire sale units come onto the market? Anyone seen any actual evidence of this happening yet?

 

Take what Barefoot investor says with a grain of salt. He is only 1 person out of a million hyping up or hyping down the markets.

The best source of research is yourself!! DYOR and conclude yourself what you think will happen or not happen. Like I said If I listened to all the naysayers when I started to invest at around 21 or 22 I'd be millions less well off.

 

My point exactly, if there really were 15,000 units about to default I think there would have been some evidence of this showing by now.

 

Oh nice. The Chinese investor factor makes sense too.

 

My two cents on this is to offer a cultural angle to the (inner) Brisbane apartment oversupply.

We must remember that unlike Melbourne and Sydney; folks in Brisbane haven't as readily adapted to apartment living. Culturally; the preference is almost always still for anything 'with a strip of grass', over an apartment. By strip of grass, I include houses, townhouses, villas etc. Particularly families with children of any age will almost always prefer this. Another cultural nuance I've observed in my many visits is that, well, unlike Sydney and Melbourne, there seem to be a lot more smokers per capita! Could this also influence desire for properties where they actually smoke in a little yard area? Who knows.

But I've been banging on for years on here that Developers have been building too much of the wrong stock type in Brisbane, so the developers are their own worst enemy. Look, maybe in 20 years Brisbane will be even more cosmopolitan and international than it is starting to develop as. And maybe then apartments will peak in demand. But in that race I actually think that Gold Coast, though smaller, is winning this race. Solid population growth, direct beachside and parkside access means locals are more openness to apartment living since their yard is all around them.

Not a dig at Brisbane (I'm invested there too - well, middle ring...) but just giving context to the apartment problem.

 

thats right. really have to get detailed. Unfortunately, a lot of potential buyers just look at the headlines 'melbourne apt oversupply', 'brisbane apt oversupply' etc and broadbrush to the entire city.
A lot of buyers either are not interested to do the finer level homework, cant do it, dont want to pay anyone to do it for them, or just dont know any better and think they are making the right assumptions what they hear in media.
...no substitute for homework i guess...

 

Apartment living isnt as far advanced in brisbane as it is in sydney and mel.
Several reasons for this, the major one being that that they dont have to- there is much more supply (that has the land- houses/toenhouses/villas) that is affordable in good inner and mid areas in brisbane than in mexico. This simply isnt the case in mexico- will be >$1 mil for sure.
If roles were reversed, ill bet that the same would scenario would eventuate in the opposite direction.
Part, but minority, i would say is the cultural factors- brisbane comes from country town origins ( and still is some would say) and there isnt a deep ****** understanding nor will to live in high density if they can afford not to ( which they can to a degree).
However, in saying all that, things are changing. It will take another 10 years of progressive change for brisbane to have the same impetus to live in inner city apartments as the mexicans currently do- this is based on prices of land getting more and more expensive in brisbane ( outpacing salary growth- nationwide trend), as well as the the cultural aspects of greater preference indepandant of $ ( looking at time, convenience, lifestyle factors etc having more prominence in buying decisions than in the past)- this is also a nationwide trend.

 

Know of one person who's renting a near new apartment in West end. 1 beder last year she was paying $450pw this year $360. Over supply and the fact that there is construction going on next door which is noisy all resulted in a $90 decrease. Can't see that as a great investment, they would have paid easily 450+ for that apartment a few years ago, and now are collecting 360 pw rent minus body corporate fees which in some of those apartments are astronomical!!!

Plenty of 2 beders now for sale for under 500k. 2 years ago it was more like 550+ in West end.

 

15,000 units...that is the supply between now and 2019...as for default rates I would envisage this to be less than 3% over 3 years...sure some people will have to use equity or cash to support it...but this happening in Sydney also.

As a matter of fact lots of people are tipping in 20-30k in extra. But so long as they don't default all is good. As for people who walk away the developer keeps the deposit...discounts by say 20-50k and puts it back on the market.