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The month in review: Brisbane
By Herron Todd White
July, 2010
We continue to be a bit coy around this part of the
country. Our on-the-ground valuers are getting some
disturbingly similar feedback from agents throughout
the great South East. Their complaint? – they cannot get
signatures next to ‘Buyer’ on contracts. Apparently there
is a bit of tire kicking but, as a general call, there is little
urgency among those holding the money. If they miss
out on one property, there is a shrug of the shoulders
and a slow walk towards the next option. Under these
sorts of market conditions, vendors often need to decide
whether to sit on the asset, or accept a fall in the ultimate
sale price. There are exceptions in the market as you will
see, but the lament has been palpable for a good two months now…around the time of the last interest rate
rise funnily enough.
Even so, there is still a bit about to temp you away from
the lucre. The key to success still seems to be stick with
the basics and stay the course with quality.
High demand rental areas with reasonably assured
income are a safe bet and one of our tribe suggested
St Lucia is a good place to park the dough. The nearby
university and ready access to facilities add up to strong
demand. One development is claiming a 6.5% return on
a $440,000 outlay for a double studio apartment design
where both tenants share kitchen facilities. It’s geared
towards cashed up, overseas students willing to part with
over $250 per week per studio, which could prove to be
a tall order. Our advice, if you’re interested in this type of
investment, is to consider all options. Second hand multi
bedroom units are offering a solid return and, more often
than not, better capital growth potential compared to
new stock. Just make sure you talk to one of our valuers
before proceeding headlong into any under researched
option.
Keeping with quality, the closer you are to the CBD,
the better your potential. Stay away from secondary
locations e.g. main road or train line frontage, and look
for the fundamentals. $500k will get you a unit in and
around the Toowong commercial district, or in nearby
Auchenflower. Even the ever active Milton precinct should
have something to offer. A 10 year old, two bedroom, two
bathroom unit in either a tower or three storey walk up
will be within your budget and they are rarely vacant in
these locations.
Further afield in detached housing, the near water
suburbs of Brighton, Sandgate and Shorncliffe are also
within reach. You won’t find a palace, but a 3 bedroom,
single bathroom, post war design, dwelling on 600sqm
is an option. These areas are reasonably solid with good
road access routes both north and south. Property priced
between $380,000 and $450,000 will show $350 - $400 per
week in rental, which helps pay back the bank while you
wait for some attractive medium to long term growth.
Also in detached housing there are the “outer/inner” ring
suburbs, and our pick is Kedron. This suburb fringes high
price localities i.e. move 2 km north to Kedron and save
$50,000. The upside for Kedron is the massive amount
of transport infrastructure currently underway. Once
tunnels and busways have their ribbons cut, you will be
able to get to work about as quickly as your higher priced
neighbours.
As for areas to avoid, we have a few of those too. The first
home owner’s sector has come off its heady highs and
looks set to slow right up until the end of the year. For
example, fringe suburbs north of Burpengary are a little
tired and beware any location where the vast majority of
buyers are relying on maximum borrowing to secure low
end property.
In the oversupply area, it’s fair to say the new and near
new highrise units in many of the Redcliffe peninsula
suburbs are having a hard time finding a solid market
based on well informed local buyers. Be a bit cautious if
considering options around these parts and have a chat
to our scribes.
So all in all we remain flat with a chance of continued
softening particularly for the secondary and lower priced
sector. In many respects this issue of the Month In Review
could be read as a “cut and paste” of the 2009 contribution.
Just ensure you are well informed, and have ready dollars
unreliant on a high loan to value ratio and you might just
snag a proud moment in your real estate portfolio.
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