While most major property markets struggle to stay afloat, Brisbane market is believed to be exhibiting resilience yet again. How will the Queensland capital city market fare in the remaining months of 2020?
Despite the overall median data trend showing slight falls in house values, Brisbane continues to witness a significantly high demand for quality housing, according to property professional Melinda Jennison.
“Over July, some open homes we have attended over the month of July have seen more than 30-40 groups through. This illustrates that buyers are still very active in the Brisbane property market,” she highlighted.
“Advertised properties that are listed for sale in desirable locations are being sold very quickly in Brisbane. Often, the sale is a result of multiple offers being submitted on the property. If listed for sale by auction, they are achieving high prices with multiple registered bidders.”
While Sydney and Melbourne lead the fall in capital city values with as much as a 1.2 per cent decline, Brisbane continues to witness strong prices still being paid for quality properties in many regions around the city, as well as several properties being traded off-market.
Ultimately, the COVID-19 outbreak has not resulted in a measurable fall in property prices across Brisbane, so buyers should not expect a bargain brought about by the pandemic, according to Ms Jennison.
House prices across Australia have fallen by 2 per cent, while unit prices are down even further at 2.2 per cent over the quarter, according to the latest edition of the Domain House Price Report.
While all major capital cities saw unit prices fall, house prices fell in most of them except Adelaide, Canberra and Hobart.
Brisbane, in particular, saw property values drop by just 1.4 per cent over the quarter – buffering price falls better than Sydney and Melbourne.
Over the month of July, the latest Hedonic Home Value Index data by Corelogic found dwelling values in Brisbane declining by 0.4 per cent.
Median house values for the greater Brisbane region fell by -0.3 per cent over the month, bringing the median house value to $555,284, while unit median values declined by -0.5 per cent, bringing the median unit value to $384,681.
According to Domain, Brisbane is showcasing a “two-speed property market” as Brisbane City, Moreton Bay, Scenic Rim and Somerset house prices all fell over the quarter, while Ipswich and Logan remained stable.
Domain’s Dr Nicola Powell said: “Prior to COVID-19, there was promising growth in prices for Greater Brisbane. Although this has reversed over the quarter, the fall in prices to date has been minimal considering the economic aftermath of border closures and shutdowns.”
“An initial pullback in seller and buyer activity during the lockdown acted to underpin prices, government financial support has kept distressed or urgent sales minimal, and incentives have encouraged buying journeys to begin.
“The outlook for residential property has improved vastly in recent weeks.”
Ultimately, despite value losses across major capital city markets, Domain noted that the impacts “have been minimal” as the expected drastic price falls were buffered by significant government stimulus, mortgage holidays and the continued low-interest rates supporting home values that have also kept distressed and urgent sales low.
Supply and demand
For the week ending 26 July, CoreLogic found that, of the 1,315 reported auctions, 54.1 per cent returned a successful result, which is an improvement from the week prior when a 53.1 per cent final clearance rate was recorded.
In Melbourne, 540 homes were scheduled for auction, but less than 50 per cent of these returned a successful result.
In Sydney, the final auction clearance rate fell across a higher volume of auctions last week as there were 594 homes taken to auction, which returned a final auction clearance rate of 60.6 per cent, lower than the 61.4 per cent over the week prior when 515 auctions took place.
Across the smaller cities, Canberra was the best-performing capital city, with 77.6 per cent of homes selling at auction. However, this was lower than the week prior when an 88.6 per cent final clearance rate was achieved.
Following Canberra’s results are Adelaide (60.7 per cent), Brisbane (43.9 per cent) and(28.6 per cent).
Over the quarter, unit rental yields fell by 3.2 per cent (equivalent to $15 per week), marking the biggest drop in more than 15 years as COVID-19 pushed landlords to reduce rates, Domain’s latest research found.
House and unit rental prices fell across most major capitals, with Sydney and Hobart unit rentals hardest hit.
According to Dr Powell: “The rental market has become highly fragmented in recent months. With weaker conditions for units compared to houses, tenants have a better chance of nabbing a cheaper unit.”
“This weakness has been led by significant rent reductions in Sydney and Melbourne inner-city areas due to a surge in advertised rentals from March to June.”
Meanwhile, Brisbane house and unit rents also fell over the quarter, but year-on-year data showed that rents remained flat.
At a city level, the rental market in Brisbane has definitely recovered, according to Ms Jennison.
With over 1,200 REIQ property management member agencies surveyed throughout Queensland, results show that only 6.05 per cent of residential rental tenants qualified as “COVID-19 impacted” under the state government’s COVID-19 Emergency Response Regulation. This represents approximately 3,950 renters from a state total in excess of 577,000 residential tenancies.
However, there are still some at-risk markets around the city, particularly in terms of the imbalance in supply and demand.
While Brisbane real estate has not been impacted like other cities with international border closures, plummeting foreign student numbers, job losses and pay cuts have still made their mark, with Brisbane’s CBD particularly exposed to reduced rental demand.
“The vacancy rate in many locations is trending down and is very tight. The areas where this trend is not happening are in the Brisbane CBD and locations immediately surrounding this and also in areas where there are a lot of higher-density unit developments. In these locations, vacancy is still a big problem. Therefore, these markets remain high-risk,” she said.
Moving forward, there remains a lot of worry and concern about what might happen to property values across the country when the government’s fiscal response starts to taper in October and repayment holidays expire at the end of March next year.
For one, experts are forecasting a rise in distressed properties coming to the market.
However, they have yet to see whether this would also mean any downward pressure on prices.
“This is where I think the different property markets around Australia will each experience something slightly different,” according to Ms Jennison.
According to the Commonwealth Bank Home Buying Spending Intentions Index, there was a 6 per cent rise in home buying intentions nationally up to the end of June 2020. This index showed the index had returned back close to levels seen in March – after much weaker readings in April and May.
“We are definitely seeing this trend on the ground with the current high volume of buyers in Brisbane. Because of this, I’m sure we could see some moderate increase in new listings come to the market without any significant impact on the supply and demand balance,” she highlighted.
“Remember, property prices will only fall when supply outstrips demand.”
With dwelling approvals now at the lowest level in eight years, the future supply pipeline also looks tight. The most recent Australian Bureau of Statistics data showed a decline of -10.9 per cent in new detached house approvals in Queensland.
Overall, real-time demand remains strong in Brisbane as property buyers are being fuelled by the lowest-ever interest rates, good levels of affordability and strong rental yields compared with many other state capitals.
Amid economic uncertainties, Atelier Wealth’s managing director Aaron Christie-David said that conditions are likely to be more difficult in the short-term, but those with a long-term view will most likely prevail.
“For investors wanting to sell, days on the market have increased as has vendor discounting, which could further impact median prices,” Mr Christie-David highlighted.
“The good news is that while yields have been trending downward, in May rental yields recovered by 3 basis points. There continues to be opportunities for investors, with supply at record lows and demand strong in certain suburbs.
“Areas which will benefit from First Home Buyer incentives and where incomes and jobs have been less impacted by the economic downturn will remain attractive to investors and will withstand any potential deeper price falls from September.”
Home upgraders will also have good opportunities in today’s market, according to him.
“Falling property values will allow for upgraders to access better homes. Steeper falls will lead to better discounts, but will also affect those opting to sell their PPOR. Record low-interest rates are also making purchases much more affordable,” he said.
Meanwhile, first home buyers will have government incentives, record low-interest rates and falling prices providing them opportunities.
Mr Christie-David advised them to focus on saving for their deposit right now so they could take advantage of the dropping property values.
“The higher the deposit, the lower the [loan-to-value] ratio (LVR) which may potentially allow you to avoid lenders mortgage insurance… If rates fall again or remain steady, this can provide good opportunities for first home buyers,” he said.
While there’s no certainty about the future of the property market, Mr Christie-David advised investors to avoid panicking and, instead, watch the market closely.
As September is a potential danger zone, he strongly encouraged undertaking extensive and engaging professionals in order to assess how any investment decision will affect their portfolios in the short, mid and long-term.
For those keen to buy, Propertyology’s head of research Simon Pressley highlighted five major government projects in Queensland that are tipped to lift the housing market:
- Inland Rail project: A $10 billion 1,700-kilometre rail infrastructure project connecting ports in Melbourne and Brisbane to meet demand for an anticipated 75 percent increase in Australia’s freight over the next decade. The inland route was strategically chosen to more efficiently transport food and general cargo throughout the eastern states and to reduce the volume of trucks on highways. Completion of the project will provide enormous scope for Australia’s vast agricultural precincts to ramp up production as a global giant food supplier. The post-construction economic benefits for regional communities will be substantial and will have a positive influence on property markets in communities such as Seymour, Bendigo, Shepparton, Albury-Wodonga, Wagga Wagga, , Parkes, Dubbo, Narrabri, Armidale, , Toowoomba and Beaudesert.
- Australia-Singapore Military Training hubs: The Australian and Singaporean federal governments have signed an agreement for Australia to provide advance military training to 14,000 Singaporean military personnel every year for 25 years. Singapore has committed to investing $2.25 billion, which will benefit Townsville and Rockhampton through facility infrastructure development. In addition to construction jobs, the 25-year provision of goods and services to trainees will provide long-term economic benefits for Rockhampton and Townsville, increasing the demand for real estate in both regional cities.
- Maroochydore City: A $430 million development of a modern CBD for the Coast. The region’s population grew at a higher rate than any other location in Australia over the last decade. The new Maroochydore city centre development will include commercial, retail, high and medium-density residential development, high-speed internet, parklands, waterways and bicycle tracks.
- Queens Wharf: A $3.6 billion world-class entertainment precinct in Brisbane’s CBD, meaning that Australia’s third-largest city will (finally) have a world-class precinct to rival Melbourne’s Crown entertainment and Sydney’s Barangaroo precincts. Due for completion in 2022 and developed across five city blocks, this game-changing project will attract a staggering 1.39 million visitors per year, bring billions of dollars to the coffers of Brisbane’s economy each year, create approximately 10,000 new jobs and breathe an exciting new energy into the Brisbane community.
- Hells Gate Dam: Agribusiness and general economic development for northern Australia will be big winners from this $5.3 billion irrigation and energy project by constructing an enormous dam on the upper Burdekin River, north of Charters Towers. According to a viability assessment conducted by Townsville Enterprise, if Hells Gate Dam is developed to full capacity, it has potential to inject billions of dollars into the North Queensland economy. The property market beneficiaries of this game-changing project will be Cairns, Townsville, Innisfail, Ingham, Ayr and Charters Towers.
This article is republished from www.smartpropertyinvestment.com.au under a Creative Commons license. Read the original article.
Honeycombes Secures Funds for Ferny Grove Village
Queensland developer Honeycombes Property Group has unveiled plans for a $140 million mixed-use development at Ferny Grove train station, in Brisbane’s north-western suburbs.
Honeycombes, in partnership with Melbourne-based real estate financier MaxCap, will deliver Ferny Grove Central, a 12,000sq m neighbourhood village and an 82 apartment residential building, dubbed The Fernery.
Honeycombes, led by Peter and Vanessa Honeycombe, secured the development rights to the site in 2017 following a competitive tender process run by the Queensland government.
“We have already received a high amount of unprecedented interest from the local market, highlighting the level of demand for both residential apartments and retail opportunities,” Honeycombes managing director Peter Honeycombe said.
The joint venture partners are expecting to announce a number of major tenants in coming months with a mix of high-profile national retailers including supermarkets, fitness centres, child-care and cinema providers expected to be secured on long-term leases.
Honeycombes is also in the final stages of securing a head contractor for the project with construction set to commence shortly.
“We have built a very strong relationship with the Queensland state government during the formation of the development and will continue to be committed to the delivery of the transit oriented development for the residence of Ferny Grove,” Honeycombes said.
“Without the government’s contribution of $9 million and the federal government’s $11 million in funding contributions for additional park ‘n’ ride spaces planned for the project could not have been achieved.”
The development adds to Honeycombes development portfolio which totals over $2 billion in delivered projects over the last 25 years.
Non-bank lender MaxCap has previously partnered with Honeycombes, providing debt funding to its $252 million Coorparoo Square development in Brisbane in 2015.
Last year, MaxCap partnered with Melbourne developer Troon Group on several commercial projects including the development of a new 3000sq m BMW car dealership in Berwick for Jowett Motor Group in the city’s south-east and an office redevelopment in Mont Albert.
It has also provided the construction facility for JD Group’s $250 million residential development in the city’s inner-eastern suburb of Hawthorn.
Funding has also been agreed for a $120 million 20-storey mixed-use residential building in South Melbourne being developed by Milbex Group.
Article Source: theurbandeveloper.com
Brisbane’s New Green Bridges a Step Closer
Work on two of the planned five “green bridges” to be built in Brisbane has begun with the lodging of plans for the projects.
The Brisbane City Council says construction will begin this year after the commencement of tendering for the proposed Kangaroo Point and Breakfast Creek bridges.
Construction of the $190-million Kangaroo Point green bridge, due for completion by the end of 2023, is set to begin first, subject to community feedback and approvals.
Development plans lodged this month show the new 6.8m-wide bridge will link the inner-city suburb of Kangaroo Point with Brisbane’s City Botanic Gardens.
The project is part of the council’s $550-million commitment to build five “green bridges” across the city during the next 10 years.
Green bridges accommodate pedestrian and cycle traffic, and are designed to reduce the number of motor vehicles using roads.
The council’s plan include bridges at Breakfast Creek, Toowong to West End, St Lucia to West End, and the now-scrapped Bellbowrie-Wacol green bridge.
The Bellbowrie bridge project was cancelled after community consultation with the Pullenvale and Jamboree Wards mid-last year.
While the city is yet to announce a new location for the scrapped bridge, the council’s proposed bridge options to West End have stirred local community concern due to the potential resumption of private homes.
The preferred alignments and locations for two of the bridges, Toowong to West End and St Lucia to West End, are currently open to public comment.
The community consultation period ends on March 31.
The Breakfast Creek green bridge will connect Brisbane’s northern suburbs with the CBD.
The Kangaroo green bridge concept, developed by Arup, Cox Architecture and the council, will include separate cycling and pedestrian lanes.
It will stretch from the corner of Alice and Edward streets in the city to Scott Street at Kangaroo Point.
Such a bridge was proposed in the 1860s and a design developed by 1890, but never built.
The council says the Kangaroo Point bridge is expected to accommodate 5400 daily trips and take 83,690 cars off the road annually.
Article Source: theurbandeveloper.com
Destination Consortium Amends Queen’s Wharf Plans
The final design for Brisbane’s Queen’s Wharf development has taken another turn with amended plans put forward calling for changes in the mega project’s residential precinct.
The $3.6-billion development—which has taken a significant footprint of the CBD—is well under way, with more than 5000 tonnes of steel, 41,000 cubic metres of concrete and 400,000 cubic metres of fill delivered so far.
The northern riverfront development will feature a new casino, the overhaul of heritage buildings, five new hotels with more than 1000 guest rooms, around 50 restaurants and a major retail precinct.
Proposed amendments to the original application have now been put forward by Destination Brisbane Consortium—which includes the Star group, developers Far East Consortium and Hong Kong-based Chow Tai Fook.
The alterations will affect the project’s residential quarter and predominantly involve changing the land usage, mix and designs of towers five and six.
Tower one is a 43-storey, 667 apartment residential project, while towers two and three—located below the Arc Skydeck—will include the development’s casino and hotels.
Tower four will be the project’s tallest residential tower at 200m while the 49-storey tower five and 45-storey tower six—which were originally intended to be used hotel and residential operations—will now be subject to changes.
The new round of changes, submitted to Economic Development Queensland, now call for tower five and six—which were previously residential in nature—to be remixed to include commercial floor space.
Tower five is now proposed to be mixed-use and could contain commercial or retail space on the lower levels with residential in the mid and high-rise sections of the building.
Tower six opposite Parliament House, which has been reduced in size, will now become a commercial-only building.
The Cottee Parker-designed building will sit next to Cbus Property’s 1 William Street, a 76,000sq m commercial tower currently occupied by the Queensland government, which was completed in 2016.
The push to diversify the hotel and casino development by adding new A-grade commercial elements comes as landlords scramble to reposition their CBD buildings to bring workers back to the city.
The Queensland capital’s vacancy rate grew to 13.6 per cent last month from 12.9 per cent in July, with most of the increase coming from reduced tenant demand during the second half of a pandemic-hit year.
Around 44,000sq m of new space is due to come online this year and a further 82,000sq m in 2022, adding to the pressure on a market that in the past six months suffered its lowest net absorption of space since January 2018.
The development has reached the fifth level of the 172-metre concrete structure known as a “diaphragm wall”, currently sitting around 20m above the Riverside Expressway.
Destination Brisbane Consortium project director Simon Crooks said despite ongoing amendments due to the possibility of shifting market conditions, the “integrated resort” was quickly taking shape.
“This time next year towers two and three, the dual tower for The Star Grand hotel, will be topping out at around 100m, meaning Queen’s Wharf they will be sitting prominently alongside and above the Riverside expressway,” he said.
“When complete, the Dorsett and Rosewood tower, which sits behind the Printery Building between George and William streets, will be around 200m and is expected to peak around mid-2022.
“And finally, topping out at 240-metres, Queen’s Wharf Residences is expected to reach full height in about two years, well after the hotel towers top-out.”
Early works for construction of the Neville Bonner pedestrian bridge began in March last year on South Bank and will be complete in time for the integrated resort development opening in late-2022.
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