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Investors, Owner Occupiers and Developers Take Note: Inner Brisbane Resi Projects, Lang is Buying There, You Should Too!

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The results of the 2011 December Quarter Inner Brisbane Apartment Report may surprise some analysts, property commentators and developers alike. The Inner Brisbane Market over-performed all expectations during the period to record the strongest sales rates for the calendar year. During the December quarter 2011, approximately $257 million worth of new residential apartments transacted in the Inner Brisbane market over 480 unconditional sales.

During the December quarter Brisbane also faced and overcame its latest hurdle. Settlement time for the first large scale price pointed residential towers post GFC. As discussed in the September 2011 Place Advisory report, new buildings in underdeveloped precincts with limited ‘comparable’ product were approaching settlement and were therefore at the mercy of valuers and their opinions of the market. Fortunately most valuations undertaken for the purpose of purchaser finance were realistic and settlement rates were therefore very positive. This will add confidence for buyers contemplating purchasing off-the-plan and negate commentary that suggests that new product is overvalued and does not perform as occasionally suggested in certain collateral.

Summary December 2011 Quarter:

  • The final quarter for 2011 saw 480 unconditional sales. This is a 54% growth in the number recorded transactions compared to the previous period and 12% above the same period in 2010.

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  • It must however be highlighted that Meriton’s Soleil recorded 111 unconditional sales, the majority of which were transferred to a related party to be entered into the rental pool. If these transactions are removed from the results, the Brisbane market still records a strong 18% growth in sales figures for the quarter.
  • A weighted average unconditional sale price of $537,188 was recorded for the December 2011. This is an 11% price growth from the December 2010 period and displays a steady weighted average sale price for the year.
  • There were five new projects launched during the December 2011 quarter: Fish Lane, The Green, Duo at New Farm, The Hudson at The Mill and Hamilton Reach’s Green Quarter.
  • The Green at showground Hill had tremendous success selling out its first stage of 42 apartments and is now entering its second release. The Green Quarter at Hamilton also saw a 75% sell out in its first release.
  • The top performing projects for the period were Soleil and Madison Heights. Madison Heights, in its third quarter following its initial release has gained momentum to outperform any other market for sale projects for the period, recording 93 unconditional sales.
  • Analysis of sales by price point saw 49% of sales under $550,000 with a further 42% of sales being recorded between $550,000 and $650,000, the majority of which was two bedroom apartments.
  •  49% of the stock sold during the December 2011 quarter were one bedroom apartments.
  • At the close of the 2011 calendar year, 2,072 apartments remained for sale across 47 Inner Brisbane projects. 55% of this remaining stock is two bedroom apartments and a further 30% is in one bedroom configurations.
  • Based upon the sales rate recorded in the December quarter, the Inner Brisbane apartment market supply has tightened to 17 months which is a good indicator that the market is absorbing the projects actively being marketed.
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Overall the 2011 calendar year will be remembered and reviewed by analysts as an average year for the new apartment market. A year where the unconditional sales recorded met long term average rates, selling prices softened and the market finished stable.

Whilst the Inner Brisbane new apartment market did not break any records in 2011, we did close out the year in a market which has entered its recovery mode. In 2011 a total of 1,278 unconditional sales were made within 5km of the CBD at an average sale price of $560,798, a number almost two and

a half times the transactions recorded in 2008. A total of approximately $716.7 million dollars’ worth of new off-the-plan real estate was sold, 23% more than 2008. With sentiment improving, interest rates expected to fall further and Inner Brisbane apartment prices stabilising around $550,000, 2012 is likely to be a stronger year.

As we enter into the next property cycle, and Inner Brisbane apartments come into vogue, it will quickly be forgotten how tough the market really was in 2011. Demand has and will continue to increase. Given that supply levels appear to have stabilised, with delivery of finished stock still well below the necessary levels required to meet the current population demands, Place Advisory stands by their long term belief that Brisbane will be undersupplied of the correct stock. Yes there
is a tremendous pipeline of proposed apartments however, there is very few parties who have the capacity and capability to start and deliver finished apartments. Experience is ever more important, particularly for the purchaser.

http://www.placeprojects.com.au



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