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QLD Over supply of units in Brisbane?

Discussion in 'Where to Buy' started by carcns, 16th Sep, 2015.

  1. carcns

    carcns New Member

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    Hi

    I'm looking at a low end unit to keep long term as a low risk investment in Kangaroo Point Brisbane. Looks good but I do wonder if there is a oversupply of units or soon to be??? Nothing seems to be reported on this yet so interested in hearing the thoughts of some investors who are on the ground in the area.

    Aim is to keep unit, do a small reno and sell possibility in 10 yrs (depending on market etc...) In meantime have little if any on going costs once rented and get CP later once sold.

    Looking at spending below $200K for a low risk investment (possibly 1 bed) to get into another market that isn't in my backyard.

    Look forward to your input.

    Cheers
     
  2. Elives

    Elives Well-Known Member

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    i personally wouldn't. i'm not to sure about the kangaroo point area but there is oversupply in west end. and theres heaps of construction going on atm. go for a drive around the area if theres heaps of new builds going on i'd look else where.
     
  3. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Plenty reported on this already:
    http://www.smartpropertyinvestment.com.au/news/14582-investors-warned-about-property-hotspot
     
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  4. norwoodman

    norwoodman Well-Known Member

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    There isn't really much new residential construction going on in Kangaroo Point. Come around the bend in to South Brisbane though, across to Milton and up to Bowen Hills, there are new apartment blocks being built in very large numbers.
     
  5. Andrew H

    Andrew H Well-Known Member

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    yes what @Propertunity said - beat me to it. looks like there is going to be an oversupply mixed with lower population growth than expected. not a good mix.

    Why only kangaroo point? I would take more time and look at many other suburbs, steer clear of units or look at another region altogether if price doesn't match for brisbane.
     
  6. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Stay clear of units. Oversupply and I believe Brissy is largely a housing market in terms of best CG.
     
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  7. jaybean

    jaybean Well-Known Member

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    Yup. In Brisbane when people say "I bought a house" they mean a house. In Sydney when people say "I bought a house" 50% of the time you need to clarify - "house or apartment?"

    Totally different market. Apartments are considered a second class asset there unlike Sydney.
     
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  8. Leo2413

    Leo2413 Well-Known Member Premium Member

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    Yep that's been my experience too @jaybean.

    For me, the issue of units in Brisbane is the price differential to a house in many places is very negligible. Also a large part of the demographic want homes. Your right, in Sydney its really a much more varied demographic. Sydney is also an international city ;) with sensitive price points catered to different markets. You don't get that as much in Brissy.
     
  9. jaybean

    jaybean Well-Known Member

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    Absolutely this too. In Brisbane it's like 20% more for a house. In Sydney it's like 100% more. It's a no brainer in Brisbane unless the location is outstanding.
     
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  10. Redom

    Redom Mortgage Broker Business Member

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    If you look at 10 year growth rates for units vs houses in most cities, there's a noticeable difference in growth rates in areas like Sydney. In Brisbane, growth rates have been largely similar.

    Probably explains this difference now.
     
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  11. Leo2413

    Leo2413 Well-Known Member Premium Member

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    True @Redom.

    When I look at a potential asset, personally I feel its important to view it from a few levels.

    1. As is stands unchanged.
    2. What is the potential to buy BMV
    3. What is the add value potential.
    4.Rentability (short to medium term holding power of the asset)



    So assuming a house and unit grow at the same rate, but if either of them score high on some of the above factors then it can greatly affect overall return. For me, homes in the Brissy market will tick more of those boxes than other dwelling types generally. But I'm sure others have different approaches.
     
  12. JDP1

    JDP1 Well-Known Member

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    couple of things here:
    1. Staying clear of units is too generic. Certainly the cdb/south Brisbane, FV etc yes, the supply [ built and approved] will kill most CG. However, a more unique apartment , constrained by supply [ mostly found in inner suburbs- where the supply of land is more limited and govt legislation of maximum #stories] are going to be the exception and will show good CG.

    2. Correct in that brisvegas residents enjoy the casino and houses. However, that is changing as there is a trend [ mostly syd/mel/bris] toward unit living. This trend isn't as advanced as that in Sydney...but is a sure and definite trend [ there have been many independent studies on this...]
     
  13. Leo2413

    Leo2413 Well-Known Member Premium Member

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    I agree with you mate that its generic to say stay away from units and I know there will be some unique, smaller apartment buildings.

    For me, the price differential in much of Brissy is just too close to make units (in general) an attractive option. Couple that with the fact that homes can allow for much greater 'add value' potential', personally I see homes as an overall superior dwelling choice (not saying units will be terrible) to apartments. I would never say that for Syd because Sydney is such a varied market with really sensitive price points. I don't see this in Brissy.

    Just my opinion.
     
  14. Heinz57

    Heinz57 Well-Known Member

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    Carcns I live in Kangaroo Point and for a PPOR I reckon it can't be beat. I am 1km fro m the CBD and all I can hear are the birds singing and I just watched the sun rise over the Birsbane River. Free public transport and bike tracks.

    Doesn't mean I invest here. But some developments are better than others. The price of some high end buildings took a battering with GFC / flood and may provide opportunities. Defo avoid the hotel type investments.
     
  15. Whitecat

    Whitecat Well-Known Member

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    Not in Good suburbs. Compare House to unit in New Farm or Clayfield bulimba or something
     
  16. Whitecat

    Whitecat Well-Known Member

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    You must be in a quiet pocket. What Street? For me kangaroo point gets killed by the motorway running through the middle of it. Nice down by the river though if you are tucked away. Good access
     
  17. cheekykoon

    cheekykoon Well-Known Member

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    Are units in Upper Mt Gravatt good still or Townhouses?
     
  18. House

    House Well-Known Member Premium Member

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    How much is it expected to fall behind the growth projections?

    I don't think you can go *too* wrong if you're only spending $200k and really want to get into the Brisbane market. Seems to be a quite a few decent apartments around that price point that can have value addd. Maybe look further out of the city where there's significantly less supply and building height restrictions.

    According to an article on YIP, there's no oversupply;

    "Brisbane is in no danger of being hit with an oversupply of new apartments according to analysis of off the plan sales over the June quarter.

    According to the Place Advisory report released this week, a total of 1,463 new apartments worth $814 million were sold in Brisbane over the June quarter.

    According to the report, one and two-bedroom apartments represented 42% and 56% of the market respectively during the June 2015 quarter, while the average sale price was $556,391.

    Despite the jump in sales figures, talk of oversupply in Brisbane is unfounded.

    According to the report, Brisbane currently has 2,402 off the plan apartments for sale, which based on the current sales figures represents around five months’ worth of supply.

    “Given historical quarterly sales rates and current demand, the availability of Inner Brisbane apartments remains undersupplied,” Walker said.

    “They sell out quickly, well before completion and increasingly there’s a very limited supply of finished new apartments.

    “We predict this will remain the case into the near term.”

    While supply may very not be outstripping demand in the Queensland capital, Rocket Property Group general manager Lindy Lear said not all of Brisbane’s suburbs represent equal value.

    “We’d have to agree that there isn’t an oversupply of new apartments in Brisbane, but we would recommend people look outside the suburbs where the big developments of thousands of apartments are going up,” Lear said.

    “We’re still pro buying apartments in Brisbane, but it’s the smaller boutique developments close to services and transport and that have lifestyle features as well, things like parks and other attractions.”
    http://www.yourinvestmentpropertyma...f-the-plan-apartments-report-says-205307.aspx
     
    Last edited: 18th Sep, 2015
  19. Heinz57

    Heinz57 Well-Known Member

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    Yes tucked away on the river facing east away from the noise in the bridge. We even had a dolphin recently. Think it was lost!