cityBack in the early 1990’s one of the big financiers printed a poster that all of us put up in our real estate agency windows, a picture of an old, greying man in a rocking chair, cobwebs strung from his legs. The caption read: “This is the young man who waited for home prices to come down.”
In Brisbane’s inner-city right now we’re hearing a common theme that’s doing the rounds of weekend barbecue chat: “If you wait for all those new apartments to be completed, prices will be much cheaper”. There is a big supply coming online, especially in some key locations. And we make no claim to be property economists. But here’s some of what we’re seeing as agents who spend every working day in Brisbane’s inner-city residential property.
1. Few of the current and would-be sellers of these apartments have a gun at their heads:
Developers have mostly sold out the new ones. And for prices of second hand apartments to fall by a sizable margin many of our clients will need to crystalize a loss. A lot of them are investors who borrowed their full purchase price plus costs, so in many cases if they had to sell at even 5% less than current prices they will actually need to find cash from somewhere to pay back the bank. Unless they have a very, very good reason to do so, these owners will simply hold on. Wait for the next rise in prices. As they do in the dip of every property cycle.
2. The demand for inner-Brisbane living is growing by the day:
We understand how newsworthy it can be to focus on the huge supply of new apartments being built. Armageddon is apparently nigh. But rarely do we hear about the trend that our sales and property management teams witness every day. The thousands – and it is thousands – of people moving in from the ‘burbs every year. It’s not just easier commuting, but the smorgasbord of lifestyle amenities on offer that draws the young, the old and everyone in between, including a growing number of families who now live in apartments.
3. This boom in local construction isn’t really about Brisbane property:
With the huge spikes in their home prices Sydney siders were always going to find a place to spend their new equity and they’ve simply done what they did in the early 2000’s and seen delicious value in Brisbane’s inner-city. Almost all of these new buildings have been pre-sold interstate off the back of that equity growth – yes there’s some international sales but their importance is often vastly overstated – and while these buyers won’t be pleased with the lower than expected rents they’ll actually get, it’s hard to see them dumping and running.
4. Replacement costs continue to rise:
There’s often a startled look on a property developer’s face when we show them what we have for re-sale, often in buildings just a couple of years old, and how affordable these apartments are relative to new projects. Even if land costs plummeted it’s impossible to see how a new apartment in our inner-city can be built at prices to compete with established ones. It’s one reason we’re already hearing about a huge number of pending projects being put on ice. One leading developer in the media this week: “Unless the project is currently under construction many of the earmarked projects in Brisbane’s inner-city will not go ahead.”
The brakes have already been applied so while prices have eased a little on buyers’ concerns about the size of the supply, no one is panicking. Those who bought expecting a quick profit probably won’t make it. But then real estate is rarely a star as a short-term investment. Rents have eased slightly – just 2% across Bees Nees’ rental managements over this past year – and we’d guess they will dip a bit further.
Overall though we’re very excited about the huge improvements underway in our inner-city. The wonderful new homes, new cafes and bars and boutiques and lifestyle amenities and all the things that become possible when there’s a big, big spike in population. The enormous investment and international profile of the $3billion Queen’s Wharf project. Proposals for new entertainment center like Brisbane Live’s concept for Roma Street.


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