Property Predictions - 2018

Leo...no offence...but you keep rabbiting on about this development in Brissie.
Where is it...care to share the numbers? I can't see to many people making massive dollars in Brisbane...5% of so yes per annum...but nothing like Melbourne or Sydney in the past, ableit Sydney is now correcting...

 

Just give it time Sash,markets within markets..
62 Prior Street Tarragindi Qld 4121 - House for Sale #126176918 - realestate.com.au

 

Gee I wish I got the money (fr bank)!

 

Been looking for the past 7 weeks for our daughter -we walked through this other day but it's above her limit -but sometimes you smell the future money as you walk past the front gate..

 

No offence taken mate, very hard to offend me these days. Read post #13 by @WilliamB, first paragraph with regards to deals in a specific market bought over the last few years which have very good returns to date.

With regards to making massive dollars in Brisbane today,I don't disagree that it will have steady growth over the next 5 years, hasn't had any widespread boomed yet, Like i said, the deals I was talking about that had very good growth are the same deals William mentions in post #13. I am holding a few of them. 1 deal the basic numbers look this this. Purchased a low 600s, build cost will be 1 mil, total dev cost just under 2mil , end sale value 2.6-2.65.m.

There are a handful of markets in Brisbane I am watching but I wont disclose specifics as I am still looking into them myself. I only focus on a few specific patches in Brisbane that I am very familiar with and I know are doing well and will continue to do well. I don't need all of Brisbane to boom for me to beat the averages and do well.

 

That's a great site, if it can be bought at a decent price then it could have quite good returns, especially with those city views and larger block sizes once subdivided.

 

Is that 600m2 or $600k

For me in Melb I am working off: 600-660m2, $1.2-1.3m dev costs are $850k total $2.05-2.1m end sale value $2.6m.

So nothing wrong wit your bris numbers...

I have seen my end numbers escalate by 10% on what I was expecting though due to Melb growth.

 

That's low 600k for 900+sqm block to build two free standing homes, low high to medium high spec.

Just last year I purchased another for around 800k another block over 850sqm, 4km from the CBD with city views for another 2 high end homes to be built. End value there around 2.8+


Also few weeks ago we just sold our last OTP unit in a JV I am doing. If we can manage the build costs then the returns will be pretty close to what we anticipated.

 

Yes it is Leo,but the asking price is very high and very rare to come on the market but you will see a lot of blocks like this start to come on the market as people who's names are on the title who have lived in that area for a very long time start to take the next stage of their life and downsize ..
Plus to level sites like that even with the the block already split on the title,and resell or rebuild is in the very high range,a few years time one never knows..imho..

 

Brisbane: I think it is Brisbane's time to get some growth but it won't reach Melbourne/Sydney levels as it doesn't have the growth and still a lot of land around in Logan, Gold Coast, Sunshine coast, Redlands etc so there's not the FOMO factor you get in Sydney and Melbourne. I also feel that the growth will not go for as long before the cycle finishes.

Sydney will always be strong but won't see the growth it has so should be growing slower in some asset groups and then plateauing in 2019. Apartments in good locations are becoming very popular.

Melbourne already is seeing slowing in the higher end but I feel with the first home owners grant and outer suburbs increasing will push up some of the middle ring suburbs 10-20km with a house or townhouse in good areas will do well as many are adopting this living. Still seeing steady growth in Melbourne.

I think the first interest rate rise predicted in 2018 will be the official end to this cycle when people will pull back. You can see Spring already not as strong as years past. More growth until next Winter and I think that might be the cycle

 

Then what are you appending the other $300/400k on?

 

Subdivision costs, interest, some consultants, and contingency.

 

Yeah well that's the problem right there, if they are asking too high then there is no fat in the deal for the developer.. unless someone is willing to pay that price and pray they can make it back in sales value. I wouldn't be doing that though...

 

Even if they're sold, they still need to be rented. Many investors "buy" on a 10-50k deposit, but may rely on rental income once complete. We haven't felt anything close to saturation in rentals because of temporary population surge and lack of completions.

There are rumors of investors buying and keeping empty, but unless they plan on holding those properties for the next 40 years, they will hit the market sooner or later.

I adjust for that in my own modelling.

Overbuilds are also very pronounced when adjusted for population. Approvals may vary 50% from trough to peak levels, but population change can be much more volatile, with more than 300% shifts not uncommon. WA hit peak approvals of ~35,000 a year, with a population growth of 80,000. that is an underbuild in anyone's books, yet a few years later population growth was 16,000. Massive overbuild. Betting that Melbourne will not experience some degree of overbuild is betting that population growth will be maintained at >140,000 ppl/year for the next 2-3 years. Personally I'm not sold.

 

OK...but for $1.3-1.4m spend in Brisbane...you are in the premium suburbs....it is not a Sydney or Melbourne yet.

 

Well your somewhat in the premium suburbs yes. Definitely not the same values as Syd and Melb which in my opinion is a great thing. Lots of room to grow for PPOR buyers who have money and want to live in Brisbane and not in the chaos of Sydney. Personally I love Sydney but when I am up in Brisbane I can definitely see the appeal of the peace and quiet with city life not too far away if you want it, plus only a short drive to the GC.

 

I think that Brisbane will grow slowly but I can't see it taking off until major projects such as Queens Wharf and other local projects such as the uni at Petrie and the foreshore upgrade at Redcliffe are completed. Those projects are due for completion around 2020. If prices in Brisbane are still 65% of Syd/Mel then I'd expect a a boom.

Economic factors such as wage growth, rising interest rates and migration might keep people in Brisbane from overspending the way that mexicans have.

 

yes, i agree with this.
Thyere are jobs in brisbane ( generally as good as those south); just not as easy to get. The number of jobs also isnt as high as mexico. This is in my view the number one reason why brisbane isnt as free with spending ( from little to large) as those down south. Conversely, thats also the main reason why mexico spends like jobs grow on trees - its not that tough to get a new one if required in mexico- and it will likely be just as good as what you came from. That allows freedom!!!
Its not a bad picture though. No where near perth and adelaide...but not sydney/mel either..Trying to get there, but without our main driver in the past ( mining), it means brisbane has to develop jobs intensive ( and gdp intensive)non-mining industries - which they are doing as can be seen from the developments ( which are non mining)...but it obviously takes time. Patientce is what is required here...In the absence of patience, id suggest to stick to sydney/mel.

 

I recall 2010-2013 circa when there were moderate signals of Sydney property transitioning from recovery to rising/boom, almost all celebrity property guru was saying don't expect Sydney to increase like last boom, and to expect moderate 6-8% per year increase

 

Hehe, I told you the experts never get it right. Some even recommended buying in Moranbah while Syd and Melb was booming..... holy shoot