Brisbane market

Some of my clients are currently active in the Brissy market. The reports I'm hearing is that competition is picking up and properties are being snapped up quite quickly.

The Herron Todd White month in review for May has the Brisbane market it listed as being "at the start of recovery" – the report is here if you're interested – http://www.htw.com.au/Month_in_Review/Month-In-Review-May-2013.pdf

Cheers

Jamie

Any possibility of positive sentiment is likely to be rubbed out by a deteriorating economic picture over the next 2 quarters. You also have an election to contend with that doesn't promise anything but spending cuts, government layoffs and more austerity. You could be looking at a credit regrading next year  which would invariably increase govt borrowing costs and induce more contractionary spending.

Our primary economic growth drivers are diminishing in a struggling global economy with nothing to replace it except govt stimulus if anything. If the dollar keeps falling you might see the large markets struggle as overseas investors pause or some prefer to liquidate and move to other markets. There's nothing good on the immediate horizon and I expect conditions to become even more difficult over the next 6 – 12 months

Go west I say – Perth that is!

Hi Freckle,

I don't think anyone doubts your intelligence, or ability to source a supportive graph or two, but I am curious as to why you hang around a property site if you don't think it is a good investment. 

I don't think property is as bad as you think. If you buy at the top of the the market in shares or commodities, I think you will be worse off due to their liquidity. You can dump your shares easier than property which we have seen before. House owners are more likely to hang on till things improve which makes them a more stable investment in my mind. 

I certainly don't get 100% deals – more like 8 – 10%, which covers me. 

To be down 40K on silver doesn't sound like a better investment to me, even if it does come off eventually! I'd prefer to sleep at night. Have you had any big losses?

Cheers!

Never said property as a class was a bad investment. The entry time for property is not now. Hasn't been for a few years now. I hold that view because to me the fundamentals that drive property in general are deteriorating and I hold the opinion that property will eventually see a substantial correction. It's taken much longer than I thought possible but it's on our doorstep now and the economic conditions suggest it's imminent. The time to buy will be soon but it's definitely not now.

Most don't. When things go wrong most people suffer.

Liquidity is an issue to some but it usually separates the investor from the speculator. Speculators like liquidity while investors rarely consider it. Shares give you a flexibility property doesn't but the rules are virtually the same. Blue chips provide stability, income and growth over the long term. Same characteristics as property.

Your properties rise and fall in value but there's little to measure that on a day by day week by week basis. That's a false sense of security. In other words if I don't know todays actual value I'm alright. When a market moves against you your trapped with no way out. There is no asset class that is a sure bet and they all correct at some point.

I've had plenty of losses. Part of the game. 

Back to the Brisbane, I find that rents are becoming increasingly difficult to increase over last 12 months. Boarding houses are now been flat on rent for 24 months, top end property ($1000pw) are stagnant. Only middle priced housing still can go up some 2-3% this year (assuming that it was priced correctly in 2012).

There seem to be inflow of amateur investors on the market, of late. Came across few people making offers on properties at listed price. One couple made offer over listed (owner occupiers). In both cases they overpaid. ROI at the moment is not making sense, you better off with money in the bank. Or renting instead of purchasing PPoR.

On the other hand some properties spend over 6 months on the market with little action. Interestingly, many contracts fail on finance. I do not know if financial institutions become more difficult or buyers use it as the 'way out' option.

I would support Freckle view on Brisbane. Cannot see any major upwards pressure drivers. It's all a mixed bag at the best. In my view, short term we are flat and mid term we will go down some.

Let's sort.

Positives:

Pollution Growth

Inflation (mild)

Infrastructure projects completions

Negatives:

Unemployment on the rise (go and talk to employment agencies – not gov statistics)

Wages increases are miniscule (in manufacturing sector anyway)

Closing off immigration channels is on the cards

People's debt levels are at elevated levels

Cooling down of Australian Economy if a fact now that is gaining traction (see AUD/USD)

Heaps of cheap NRAS style apartments coming on the market (everywhere in CBD)

Hi all

biggaz13 – I agree with the sentiment of your post. The Mandurah and Perth markets couldn't be more different – I have met very few people who want to live in Mandurah (for a variety of reasons) and this obviously equates to poor growth and in Mandurah's case, a decline from when everyone rushed in.

I live 12km from the Perth CBD and most homes are sold before being advertised on the market – all at under 400K and renting for at least $350/week. This area is just starting to grow, and a very different picture to Mandurah!

Will I anger folks by stating what I figure is the obvious:  that top-end property has the farthest to fall in times of trouble?

Fair point biggaz.  As long as the war chest is sufficient to enable you to ride the peaks and troughs, all is well!

JacM of 1992 posts. I’m rating your post with a thumbs up.
If the pattern of the last 120 years holds true, and I reckon it will.
The good times are not too far away.