THE bubble has burst for inner city unit owners, some of whom have scaled back price and rent expectations losing thousands in the process.
The market has now swung firmly in favour of buyers with apartments available for as much as $45,000 less than their owners paid off the plan just three years ago.
With the Brisbane unit construction boom at its peak, thousands of new apartments have swollen the rental and sales supply pool, triggering a fall in prices and rents for existing stock.
Owners looking to exit the market face a tough decision with resale prices dropping dramatically in the space of a year, some by as much as $25,000. One building alone in the Brisbane CBD has over a dozen owners trying to sell similar units at prices below what they paid off the plan.
Chinese buyers turn to middle ring
Industry analysis firm CoreLogic RP Data warned that Brisbane was one of four capitals where the units were “more than twice as likely to resell at a loss as houses”.
In Brisbane 15.6 per cent of units sold in December quarter were at a loss compared to 5.3 per cent of houses, CoreLogic RP Data found, and over 11 per cent of investors taking a hit in the process.
Some owners now find themselves having to choose between the better of two “evils” – falling prices or falling rents.
Rentals rates were down -0.2 per cent across the capital cities over the year to March, with Brisbane registering a -0.7 per cent drop.
Retiree Greg Akeroyd, who bought a one-bedroom investment CBD unit for around $410,000 all up three years ago, has decided to sell.
“Rent was $500 (per week) for a couple of years then 12 months ago it started dropping. It went down to $450 and now it’s offered at $420 (and remains empty),” he said. “The income from the unit is evaporating and there’s 10,000 units more coming on the market in Brisbane in the next year or two.”
He said negatively geared property only helped those with income, not retirees.
“I dropped the price to $375,000 for a couple of weeks, and it’s now at $365,000 and I’ve had two offers of $350,000. It’s just burning money so I might take one of those $350,000 offers soon if nothing else happens.”
Mr Akeroyd, who bought and sold over a dozen properties profitably, said it was only the second time he’d take a hit in property – and both cases involved units.
“I will take a hit of probably $70,000 if I sell at $350,000 with $10,000 commission to pay but at least it’s one less headache … I wouldn’t like to be someone for whom this is their first investment because they would be burnt for life. You’ve got to be philosophical about it, you win some, you lose some.”
Originally Published On: http://www.couriermail.com.au/