Should I Buy A Brisbane Investment Apartment?

Here are my random thoughts about investing in the Brisbane property market, primarily in the inner city Brisbane apartment market:

A. There are less overseas students wanting to rent apartments this year. This trend will continue.

B. There are less investors willing or able to purchase apartments, particularly high end apartments.

   

C. A number of people in their 50s and 60s, who may have considered purchasing an apartment to live in (downsizing) or as an investment are not buying at present. Either their super funds have less money than they hoped, they are more risk adverse, or banks will not lend. Also, people who were looking at riverfront apartments have paused buying decisions due to the floods.

     

D. There are a huge number of apartments on the way. At current sales rates, it will take years to sell these apartments. Many are small 1 or 2 bed apartments. Would you want to live in them? See list of apartments currently being built or being sold.

  

E. Many are predicting no capital growth this year; some a predicting 10% decrease in values, some predicting 35% decrease in values. This makes buyers nervous. Many are waiting. Maybe prices will not go down -- who knows? But there is no urgency in buying, and those who are making offers on investment properties are doing so at a significant discount to the list price. So sellers are not selling, and the number of apartments listed for sale is increasing. The only sellers who are selling are those who are dead, heading for bankruptcy, are bankrupt, are getting divorced or have lost their job. So it is hard to work out what the market price for a property (willing but not desperate seller; willing but not overly keen buyer) is actually doing at present. Maybe if salaries increase and unemployment does not decrease, then prices will go up? I hear that 25 year old storemen and labours in central Queensland are earning $150,000 a year plus overtime -- and are buying investment properties.

  

F. Rental returns on apartments are average. Interest rates, council rates, water charges and body corporate levies are increasing, thus decreasing net returns. This decreases property values.

   

G. The Gold Coast is dead dead dead. There are a huge number of unsold apartments in The Oracle. Juniper's Soul is coming up to settlement soon, and smart money is betting that it will end up like The Oracle. Juniper must be sweating. And Gold Coast apartment returns will take a dive, because fewer tourists are coming to the Gold Coast. What does this mean for Brisbane? Bad news about the Gold Coast impacts the mood of investors in Brisbane, and of interstate and international investors thinking about investing in Brisbane.

  

So not a good time to sell. And probably worth while waiting to buy. But if you listen to the real estate agents, who only make money if you buy, they will tell you otherwise.  Take care!

Comments

[Lexzylun Alex]

buying investment property

This is a great tip for the investors that made them more aware on what to do and what to avoid in investing. Thank you very much for this post.