Brisbane Unit Market ..... "Over Supply?"

I am interested to hear opinions regarding new apartment developments in the South Bank area of Brisbane.
I've had offers from developers to purchase off the plan in the area with a completion date proposed within 3 years.
Several real estate agents I have spoken to have discussed a possible over supply of units in Brisbane already.
I'd appreciate your considerations and comments on whether this would be a sound investment purchase.

 

Avoid, there's thousands of units being built.

 

That is correct Over supply inner city Brisbane

 

Would not touch these areas - Apartments inner city brisbane are comparable to melbourne PSQM which is crazy. Melbourne developers have done quite a bit in Brissie in last 5 years however way too many around the CBD and prices are not right in my view. Many are not valuing up as well. Know a few of the developers in the West End area, offering ridiculous comms to move their stock....says a bit.

Look further out - 2-8km
Cheers Ivan

 

I agree with @Redwood above. Look a bit further out..just don't want cg to be suppressed by high supply. You never know when u need to sell or pull out equity..and you need it to grow for that.

 

Thank you all for your thoughts.
.....Its pretty much as I feared
Much appreciated!

 

[Q11804, member: 688"]Would not touch these areas - Apartments inner city brisbane are comparable to melbourne PSQM which is crazy. Melbourne developers have done quite a bit in Brissie in last 5 years however way too many around the CBD and prices are not right in my view. Many are not valuing up as well. Know a few of the developers in the West End area, offering ridiculous comms to move their stock....says a bit.

Look further out - 2-8km
Cheers Ivan[/QUOTE]
I know of two investors whose end valuations came in short of $50000 at settlement for their apartments..

 

Better value with post war or 70/80's older style homes on land in the middle ring suburbs...from my personal experience as an investor I have had more maintenance matters to address in my new apartments (purchased 2009) in contrast to my houses that are much older and better built!

 

Even though you got the message, I'll reiterate @Hey_rick – don't do it. Great way to cripple yourself from moving forward and sabotage your financial future.

 

Ouch! were these for off the plan CBD units?

IMO, older style 70's brick units 4km's out are still a dud investment.. I started buying them in 2009-2011 for about $300k. The CG has been very disappointing.. Had I stretched the budget up to $350k and bought a house in Mt Gravatt East for example they'd be worth circa $500k.

As some clever people have pointed out, the disparity in price between units and houses in Brisbane has been relatively small. So you're much better off buying a house with land that will only increase in demand.. Units continue to have a downward spiral in demand.

 

Buy the shop underneath

 

Will the oversupply affect townhouses? I can't afford a house in the areas i want to live so looking at thouse.

 

generally not. TH will have more land than apartments obviously, they will usually be bigger internal living space,maybe over 2 levels of space, and they are usually in areas where houses or other th/villas are the dominant type and not apartments- and even if there are apartments, they wont be big developments like those in the CBD.
However, similar rules apply- avaoid those with pools etc, high BC fees, Id avaoid over 15 TH in the lot for Brisbane. Location will be key. the more land on title, the better.

 

In oversupply unfortunately. Older units with big floor plan and aspect or unique in some way still selling but ones with nothing different about them and balconies looking out onto other buildings are not selling. Prices for 2 bedders dropping from mid to high 300k to low mid 300k. Rents also dropping from mid to high 300s to low to mid 300s per week.

 

What suburbs are you referring to?

 

Interesting

Our new Two Bedder in Teneriffe has just had a rent increase from 600 to 620 and the valuation when we completed earlier this year came in around 50 K over what we paid for it . The block was fully rented out within around 6 weeks of completion.

So obviously there are pockets that are going well .

Cliff

 

Must be something unique about that complex because I've heard of others languishing in Tenneriffe. Maybe they paid too much. That general area is out of control with new apartments and still more coming. Nothing nice going in in the way of parks. Big bits of cleared land ready to go next to the existing towers. It's going to be like Portside but maybe denser.

Maybe there is the demand there....

 

And that's the interesting part about this...high supply around the area does not automatically mean all apartments in that area is a bad investment..it maybe hard to find the gems, but some would be there and will return as has the above example.
Tough to specify winners from losers on paper...really need to check it out first hand... Pre-requisites would be location, decent size, differentiating factors, and low BC fees for starters.

 

Inner west of Brisbane that are 2 bedders in older buildings with no unique features, typically smaller like the ones with thin lounge room with no windows that have balcony that looks straight onto another apartment block.

 

I looked at a 2 bedder for 320k in kangaroo point a couple block North of gabba Stadium in 8 pack renting for 400wk. City views. I thought that was a pretty good deal but i need money for ppor and too small to live there. New ones going up diagonally across the road. But no light impact.