HTW October review - are Brisbane units at top of cycle?

Interesting they call out Brisbane units as being at the peak on the property clock


http://htw.com.au/Month_in_Review/M...il&utm_term=0_e4512ecf43-9d310bc639-127929061

 

Yeah that's interesting.. It could be because of the supply.. Don't know their rationale for calling units at 12 o'clock.

 

I was going to post some pics the other day in regards to this

I drove from south to east of the city then through to west then up north and could not believe how many apartment blocks are going up. The cranes are everywhere. If I was holding unit stock in Brisbane I would be VERY concerned

 

I would be too - particularly near the CBD, West End, Fortitude Valley, Bowen Hills. It's Melbourne Take 2 - but with half the population to absorb it. You need to get 6-7KM out of the CBD to stay away from what I believe will be a huge oversupply near the CBD in the next 12-18 months.

 

Had lunch with one of the Brisbane HTW Directors a month or so back and he was telling me how many unit development deals had nor even got off the ground due to issues with financing or lack of pre-sales.

We sold out our last unit it one of our development sites end of 2014 as we could see the writing on the wall in the Unit front and now only have a couple of sites under a long term option.

We have totally switched development to standalone homes as i think rents in the Inner City suburbs will fall over the next 12-18 months. Same thing happened some 6/7 years ago and the slack still hasn't been picked up there.

Cheers

Richard

 

Hmm... Being a non-resident, my first IP is a 1br OTP in Fortitude Valley due for completion in three years (Flat Iron development). After reading the above comments I've got the toes crossed as well as the fingers!

 

There also seems to be a lot off multi-storey unit blocks popping up around Garden City. I haven't been to the north lately, but I'd imagine around Chermside is similar.

 

chermside has heaps, 6+ cranes up

 

I would say the units market is still in the bottom or recover phase of cycle. The units price in brisbane has been stagnate for many years, how come is it in the top of a cycle? IMHO, the boom will come after we have good employment, economy and population growth.

 

Because there has been, and planned, a huge amount of units being constructed.

 

Here's two of the biggest residential apartment developments due for completion around 2017 (I'm currently involved with a few of these buildings, but wouldn't be buying one of these). The 4 tallest buildings in Brisbane will all be residential buildings in a couple of years, which is similar to Melbourne. Sydney is a bit of a different case where the tallest are mostly office.

Skytower (1119 apartments) - http://www.brisbaneskytower.com/

300 George Street (428 apartments) - https://brisbanedevelopment.com/300-george-street/

Then there's a few others around the Albert Street precinct as well waiting to get going.

 

I just don't understand all the hype around Brisbane. It's going to do OK, but it's barely moved during the lowest rates in history when "actuals" were still available , and servicing just got 30-40% harder everywhere. It's only real chance is that APRA forces investor money there because its cheaper than Sydney - which I think is a distinct possibility to be fair, but will be fairly short lived because of APRA. It will be 6 or 7 years until the supply is soaked up, so you have to take a fairly long term view in Brisbane. I bought 3 properties there, but they are all NRAS so I have bought myself 10 years to ride out the oversupply- and while I wait I'm banking and then reinvesting over 100K tax free per dwelling and it's costing me nothing .. It just feels just like Melbourne Version 2.0 - massive supply coming but with a much smaller population to absorb the supply. And as we know from Melbourne, that means very low rental yields.

I think Perth has equally good 10 year prospects, as it has population drivers that are predicted to take it past Brisbane within 10-15 years. Like Melbourne - it's flat now, but if you can buy for the 10-15 year term you'll do well as the population grows, and the APRA effect will have been absorbed by then as well, and some capacity will have been restored. And the yields are better.

 

Your talking about units specifically? I inspected 9 houses in Logan on the weekend, the ones that were priced well had quiet a few groups at each inspection and a few under contract already. A lot of places are selling before hitting the net. Houses (in Logan) that were selling for about 220k 12-18 months ago are now selling for 260 upwards, so to me in 12 months thats quiet a good gain (15+%?), and people say Brisbane is slow/barely moving? As an ex Sydney person I think there are pockets of Brisbane that look like very good value at the moment if wanting to invest in houses. I think units could do well but I'd be allowing LOTS of time, I'd rather be buying houses now in Brisbane. I'm not saying Logan is the only place to invest in Brisbane but I'm familiar with the area and its has moved.

 

Would not go near Chermside - 'rows' of apartments, yes they may be selling however long term there will not to be alot of growth to support the supply. I would not invest there.

Cheers Ivan

 

i 100% agree

 

I would be wary of these 'population drivers' I suspect they have reversed a bit since the last numbers were taken.

 

Interesting, thanks for the link.
Adelaide houses and units have gone up a clock position from last report.

 

I'd say it's at the top of the clock as a signal not to buy? If they put it at the bottom of the cycle wouldn't that indicate that the property will soon be on the up swing and ripe for CG?

My understanding is that 12 O'clock means no CG to be had; 3 O'clock means still no CG, but one day it will get better; 6 O'Clock means we are at the bottom and things are about to turn around; and 9 O'clock means market is moving and still has more room to move.

So, as the units are such a bad investment, the hour hand is forever stuck at 12 O'Clock or peak of cycle?

 

I would agree with some of the views here...I would consider houses or well located town homes in brisbane..not really apartments in areas where there are many being born.

 

I agree with your 12, 6 and 9 o'clock definitions except that I've always took it to be 3 o'clock to mean that market has fallen from its peak and will continue to fall for a while.