Brisbane Apartment's blog

Brisbane Real Estate Capital Losses

RP Data reported recently that Brisbane apartments in 2011 lost suffered a capital loss of 6.5% (when looking a medium sales prices of apartments that actually sold in 2011).

Let's assume Mr Investor purchased a Brisbane apartment on 31 December 2010 as an investment paying $485,000.  Assume that he borrowed 80% of the purchase price, including stamp duty.  Stamp duty is $14,850.  So the total purchase cost, including legal fees and bank fees, is just over $500,000. Thus, Mr Investor put in $100,000 of his own money, and borrowed $400,000. 

That apartment, if it went down 6.5% in value, is now worth $453,475.  That is a capital loss of $46,525. 

So Mr Investor has had an actual capital loss of over 46% in one year.  That is the risk of leveraging.  A small decrease in value means a large capital loss where there is a leverage situation.  (If Mr Investor had to sell, he would pay over $10,000 in real estate agent fees, making his capital loss even greater.)  If values decrease further, Mr Investor will be completely underwater.  I suspect that there are many apartment owners in Brisbane who have little or no equity left, especially those who have purchased off-the-plan in the last 5 years and paid too much.  The only saving grace is for foreign investors who may make a profit on exchange rate gains.

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Sales Data for Recent Brisbane City Apartment Resales

Here are the recent reported apartment sales in the larger Brisbane downtown buildings.  Most of these sales closed in the period from late October to early December 2011.

Charlotte Towers

• Apt 2110, 1 bed, 1 bath, 1 car - $382,000

Aurora

• Apt 393, 2 bed, 2 bath, 1 car - $665,000
• Apt 236, 2 bed, 2 bath, 1 car - $515,000
• Apt 512, 2 bed, 1 bath, 1 car - $582,000

Festival Towers

• Apt 3401, 2 bed, 2 bath, 1 car - $475,000
• Apt 1707, 2 bed, 2 bath, 1 car - $440,000
• Apt 2110, 1 bed, 1 bath, ? car - $350,000

Felix

• Apt 356, 2 bed, 2 bath, 1 car - $505,000
• Apt 276, 2 bed, 1 bath, 1 car - $492,000

River Place (82 Boundary Street)

• Apt 302, 2 bed, 2 bath, 1 car - $690,000
• Apt 326, 3 bed, 2 bath, 2 car - $1,497,000
• Apt 231, 2 bed, 1 bath, 1 car - $423,000
• Apt 110, 1 bed, 1 bath, 1 car - $410,000

Skyline

• Apt 55, 1 bed - $320,000
• Apt 131, 3 bed, 2 bath, 1 car - $700,000

Admiralty Quays

• Apt 9, 3 bed, 2 bath, 1 car - $900,000
• Apt 67, 1 bed, 1 bath, 1 car - $580,000
• Apt 135, 2 bed, 2 bath, 1 car - $780,000

Admiralty Towers Two

• Apt 57, 2 bed, 2 bath, 1 car (103 sqm) - $660,000

No reported recent sales (last October to early December) in Casino Towers, Quay West or Admiralty Towers One.

 

Brisbane Apartment

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