Posted by Rob Honeycombe on 25 October 2010
Australia’s rental marketplace has long had a reliance on small investors, but in recent years the number buying residential real estate in Brisbane’s inner city has been low. After the strong rental growth of 2006-2008 returns have leveled off and big capital gains aren’t considered a sure bet, at least in the short term. Finally the growing confidence from self-managed super funds may give investment property a much-needed new buyer group. One with a longer term view of returns.
Once considered an option only for the very rich, we’re recording more and more property sales to self-managed funds. These are often mums and dads with a decent but not massive sum in their funds, who are using the growing acceptance (and sometimes enthusiasm) from banks to fund a residential property purchase. Accountants and other advisers are learning more about the required structures, and despite tinkering from the government there’s increasing confidence in this as a way to leverage your retirement savings.
The set-up isn’t ridiculously expensive or time-consuming, the bank loan is limited-recourse, you can get some real diversity in your retirement fund and it gives you greater control over the asset’s management. Many of us know and trust real estate as an investment vehicle and directing some of this nation’s enormous superannuation reserves into housing can only be a good thing.
Worth a call to your adviser?
Tags: Brisbane property manager, Brisbane rents, capital gains, investment property, superannuation
Posted in Brisbane landlords, Brisbane's sales market, trends in Brisbane property | No Comments »
Posted by Rob Honeycombe on 5 October 2010
It’s hard to write an attention-grabbing headline with words like “okay” and “normal” but that’s the best way to describe our view on the current sales market in Brisbane’s inner city. The luxury end might be a bit wobbly but for most property owners there are good results to be had if they sell.
There are buyers about, they are cautious, but where they see something they want they are making reasonably quick decisions and they are paying reasonable prices. It’s rare to hear of something selling cheaper than it might have done a year or two ago. Similarly we haven’t witnessed too many record-breaking results. Prices are okay and probably nudging up slightly.
One ‘typical-ish’ recent result: we sold an apartment last week for $45,000 more than its owners had paid just two years ago, a 13% gain.
So why then do some people say it’s not a good time to sell? Maybe because we’ve become so used to high growth! Researchers RP Data wrote an interesting report on the changes to Australia’s median prices over the past thirty years, and specifically looked at the gains in 5 year lumps. Our house prices jumped a whopping 13.9% per annum from 2000 to 2005 and then a solid 7.5% pa over the past five years.
So the “I’ll wait til my price jumps another $50,000 before I sell” approach is tempting. We’re in denial that the market might have returned to a period like the 1990’s when we had 2.8% per annum growth from 1990-95 and 5.2%pa from 1995 to 2000.
Every real estate agent prays for another boom, but worn as our knees might be, we’re still getting on with making sales and helping our clients move on with their plans.
Tags: Brisbane house prices, capital gains, RP Data
Posted in Brisbane's sales market | No Comments »
Posted by Rob Honeycombe on 1 July 2009
By nature, I’m cynical. I hear the nation’s not officially in recession and I’ve been reading the reports about price growth in Brisbane property. RP Data’s Tim Lawless said yesterday the “latest results herald a national residential market recovery.” But after owning my St Lucia apartment for 22 years I was always going to be slow in making the decision to sell.
I grew up believing, and still do, that you should never sell. Back in 1987 I got a first home grant of $4,000 from the PM (thanks, wherever you are now Bob!) and the capital gain’s been pretty tidy in that time. It’s good real estate. But this unofficial recession’s opened some opportunities to expand the business and I could do with the funds. And now is looking like a great time to sell.
My main reason to sell now? There’s a shortage of property on the market. Not a massive undersupply, and for the dearer price points this probably doesn’t apply. But for my place at sub-$400,000 the sellers I’m competing with are very low in number. Scarce, in fact. So my sale price is likely to be a fair bit higher than if I’d sold this time last year (provided my agent here does their job!)
In recent weeks our agency’s made one sale at full price and another at more than full price. First home buyers are still busy out there and with good reason – interest rates are very cheap and the massive job losses haven’t happened. Sentiment seems to be turning as journos make a running story of good news and confidence is bubbling up.
Properties are selling. Some home owners have worked out that getting a bigger home and upgrading in a slow market can save you money. How? If prices were down 10% your $500,000 home has dropped $50,000, but if you’re buying an $800,000 place it’s down $80,000. You might be $30,000 better off than if you’d traded up during the boom. And right now the lower end’s prices are strong, so for many the trade up equation is even better.
Regardless of economic news the world goes about its business. People are born and people die, couples join and split and the normal demands affecting the real estate market continue. I don’t think the market’s on fire but I do think some home owners are missing a good chance to sell.
This time it won’t be me.
Rob Honeycombe
Managing Director – Bees Nees City Realty
Tags: capital gains, consumer confidence, first home owners, home price growth, housing price points, RP Data, St Lucia Brisbane, Tim Lawless, trading up
Posted in Brisbane's sales market, real estate marketing | No Comments »
Posted by Rob Honeycombe on 2 May 2007
Many apartment investors set a 2 bedroom minimum for their home hunt and in doing so bypass a large part of the inner city’s market. With our household size still shrinking due to divorce and lower fertility and death rates, we need to keep an eye on what demand there is for each type of home. Prominent researcher Michael Matusik this week claimed that people living alone would soon (probably within 15 years) represent Australia’s largest household type. In New Farm, Bowen Hills and the Valley lone person households already occupy more than 40% of dwellings.
So which is the better investment apartment – 1 bedroom or 2? There’s no question 1 bedrooms are cheaper for tenants. In the 1st quarter of this year median rent for a 2 bedroom in the inner city was $350, while a 1 bedder was just $250. Unless tenants intend to share or somehow make permanent use of the 2nd bedroom it’s an expensive accessory. Any good property manager will tell you right now the smaller (read “cheaper”) apartments are definitely quicker off the mark, but much of the supply available is still skewed to 2 bedrooms. In the 1st three months of 2007 there were 2480 new bonds for rented 2 bedders and 1,704 for 1 bedrooms.
What about yield/returns and capital gain? If we could find reliable stats to measure this we’d be pretty smart cookies! As an example only, our two most recent sales were in the same Spring Hill building – a 2 bedroom sold with a gross return of 5.7% and a 1 bed with 5.5%. So we did the maths on capital gains in that same building. There’s been 12 re-sales of 1 bedroom apartments since completion in late 2005, at an average 23% gain. The 10 re-sales of 2 bedders have reaped their owners an average 16% increase in value. These apartments all had very similar outlooks and the same level of finish and amenity.
Like any marketplace there’ll be trends and shifts, but affordability and shrinking households suggest that while 2 bedrooms will continue to appeal to a broad market, 1 bedroom apartments might be a worthwhile investment for the inner city. And with the money you save you can always buy two properties (we are real estate agents after all!)
Tags: Bowen Hills Brisbane, capital gains, household types, Michael Matusik, New Farm Brisbane, Spring Hill Brisbane, the Valley Brisbane
Posted in Brisbane's rental market, Brisbane's sales market, Spring Hill, trends in Brisbane property | No Comments »
Australia’s rental marketplace has long had a reliance on small investors, but in recent years the number buying residential real estate in Brisbane’s inner city has been low. After the strong rental growth of 2006-2008 returns have leveled off and big capital gains aren’t considered a sure bet, at least in the short term. Finally the growing confidence from self-managed super funds may give investment property a much-needed new buyer group. One with a longer term view of returns.
