QLD slow brisbane sales and rental market

Dear brains trust

I have been reading lots about the brissy sales market and have also been making lots of calls about the rental market and they both seem very slow atm.

We are looking to buy a newly built 2-2-1 in yeronga which if we proceed, will settle at the end of november...heading into december when things are even slower.

Guess i am getting cold feet as i am worried it wont rent at the $470 ive been quoted and also worry since the news stated yesterday that they are expecting a 7% drop in property values next year.

as the complex has just been finished there are a number of units for rent and for sale that dont seem to be doing much.

i am looking for some reassurance, words of confidence or even warning if need be.

Background....
1) this is our 3rd investment. We have a PPR too.
2) looking for blue chip CG within 10km of capital city
3) first IP interstate
4) under $500k our budget
5) not in flood zone
6) close to trains n shops

Looking forward to your replies...

TIA
Peta

 

Hi, are you certain not flood affected in Yeronga? ... but anyway, I have no idea what you're describing about the market being slow, I live in this part of Brisbane and the market is hot right now, it is rare that anythingisnt under contrcontract within 2 weeks of being listed atm in the Yeronga/Yeerongpilly/Moorooka/Salisbury corridor. Granted though Yeronga is already full of townhouses.... but if you go and talk with the agencies in these areas... they don't have enough stock to sell...

 

I got a 3 bed few year old townhouse in a small complex of 5 with nice finishes in Camp Hill.
Been vacant about 2 months now and it should be valued over 600k.
Can't even get someone in for $500/week.
Was last rented for $560.

If your buying for sub 500k, you'd be doing very well to get $470/week.

 

Hi ace in the hole
so did you buy that 2 months ago?

I have based my feasibility on $450/week (not $470) with 4 weeks vacancy and it works out being -$80/week all inclusive. still worried though.

Is this all a sign of a poorly performing market? One agent told me its the slowest they have seen the market in 17yrs!!!! Not really consistent with the hype about the bustling brissy market!!!

 

I have checked the BCC flood maps and it shows 'very low flood risk'. It wasnt affected by the 1974 or 2011 floods. Its not down near the "O" streets lol. The road is 14m above the river water level.

Ok so the sales market might be moving but whats happened to the rental market??

Which suburb are you in RandR?

 

Nah, built them new a few years ago.
Got 6 new in Annerley too.
Up until very recently all my rents for these have been in the high fives.
This is the first sign of rental weakness I've experienced in the few years I've had them.
Seems it's gonna get worse too.
I'm expecting that I'll have to drop rents considerably when others become vacant.

 

But that can be a good sign too though right....a sign the market is on the rise thus compressing rents. I dont know how to tell if thus is whats happening or its its an over supply issue or a lack of demand issue

 

Um, I don't see how it could be a good thing.
Over supply and lack of demand are both bad for property investors.

 

Haha!! Yes of course over supply and lack of demand are but what i am saying is....i dont know if what i am seeing in the rental market there is a sign of over supply AND no demand....OR....a sign of a compressing market because its gaining capital growth???? Sorry my post wasnt ver clear

 

Rental slow - tenants are buying.

Sales Market is not slow. Reasonably priced homes are under contract before their open home.

The sales data is lagging. Once the prices rise, people will again begin to be priced out.

I don't mind wearing a decrease in rent with a 10% pa increase in value as I've seen in my IP this 3 years.

 

Hi there - 10% increase each year for the last 3 years? What suburb is that in?

 

I wouldn't be buying a unit in Brissie under any circumstances, if that's what I understand your doing from your post. Have you looked into house and land?

 

Ah... everywhere? Lol

 

Mount gravatt East.

And it's probably more than that - consecutive bank vals went up 13% in 3 months alone this year, then had an offer to buy for 11% higher than this 2 months later... so on paper, thats 26% since Feb this year alone. Maybe I should have sold at that price, but didn't, and no regrets.

 

I had a brief look but we want something new to maximise depreciation and also have more security regarding flood risk as council has applied different flood overlays after 2011.

We want something within 10kms of brissy so it would most likely be an infill which are rare. We are not interested in knock down rebuild at this stage of our strategy.

 

Thats a great performance....thinking now that maybe we have missed the mark??.?

 

But on that same property, I dropped the rent 11% and had it vacant for a couple of weeks for the first time.

 

I don't know, I hope not, but I think Mount Gravatt East has only just started in a grander time frame (I'm thinking 5-10 years). The developments have been happening for a while, but the old houses in the old housing commission areas are only just starting to move. It will take a few years, but I think that area will become very desirable with people being pushed out from Holland Park and surrounds. Hey, that's how we ended up there in the first instance and got 'lucky'.

MGE didn't do a whole lot before 3 years ago. It's undergoing gentrification with the strip of restaurants and cafes etc and its close to freeway, motorway, Garden City and CBD, and bushland/lookout. Win win for OO/PPOR purchasers, and they are the properties I want to hold.

 

Hi Peta, sounds like you are able to pull out if you want to?
As above, I'd try to do as much research as you can before your deadline. Units are projected to be flat for quite some time. The money might be put to better use elsewhere.

 

So you want to buy a brand new unit that could quite possibly remain vacant for a few months with rents looking like they are going to drop as result of an oversupply..... 'to maximise depreciation'.

Am I missing something here? Why not just buy a house on a decent block of land 10km from the CBD that you won't have any trouble renting out?