Monday, June 20, 2011

Burbs Property Sales Update: 18th June

A pretty quiet week with one published sale in the $500k+ in the Burbs and Surrounds (source: Courier Mail). There was one more that I know of - 18 Consort St in Corinda - that didn't make this week's paper.

The number of properties on realestate.com.au in this bracket fell from 644 to 634 but it is difficult to tell how much of this fall was: a) sales b) withdrawals or c) price reductions.

New property continues to come to market but the rate of supply appears to have slowed. School holidays are almost upon us so expect things to go quiet for a while.

Saturday, June 11, 2011

Burbs Property Sales Update: 11th June

There were 6 published sales over $500k in the Burbs and Surrounds this week and two others that haven't yet been published that I know of. Five of the eight were in Corinda. The place to be, quite clearly! Two of the eight sales were over $1m, so week on week, this was a fairly strong result.

The bad news is that the total number of properties for sale in the Burbs and Surrounds over the $500k mark has increased from 634 to 644, according to realestate.com.au, which points to the supply side continuing to swamp whatever sales are occuring. April mortgage approvals data for Queensland came in better than expected (an increase of 4.8% vs 2.3%) but the overall number is still much lower year-on-year.

The pundits and 'experts' continue to scratch their heads as to why the housing market should be so weak during a time when:

- Australia has full employment
- the economy is mean to be recovering strongly (relative to the rest of the developed world)
- there is a commodity boom on

For these reasons they expect an imminent recovery, but they shouldn't hold their breaths.

Monday, June 6, 2011

Spruiker's Folly No.1

The first in a series of regular posts highlighting how badly mispriced much of the property is in this area. While the agents will defend themselves by arguing that it's often the vendors themselves who are the driving force behind the pricing, it's the agents that are willingly taking on the mandates at vastly inflated prices and endorsing these outlandish prices.

Ann-Karyn Fraser of Place estate agents is one of the stand-outs when it comes to over-pricing and under delivering. She wins a lot of mandates, for sure, but she doesn't appear to be selling anything. What a surprise!

After a massively expensive marketing campaign to shift 18 Consort Street in Corinda, the best bid at the recent auction was still a massive 20% short of the vendor target: $1.2m vs $1.5m. Hot on the heals of this outstanding result, Ann-Karyn has a new property to market at 39 Skew Street in Sherwood. For those who don't know, this is in the 'corridor' between Oxley Rd and the railway line. Not a bad thing in itself but this road is a well used rat-run for locals wishing to circumvent a lengthy wait at the intersection with Sherwood road and under the new council planning proposals developers are now allowed to build 5 story unit blocks here. Exactly where, then, you may wish to buy a newly renovated 4-bed Queenslander on a modest 607sqm, especially if you had $945k burning a hole in your pocket .... um, on the other hand ...

This property is surely not worth much more than $700k -- at best -- no matter how nicely renovated. Its location prevents a higher valuation. There have been nice enough properties on similar-sized blocks selling for far less in genuinely desirable high-side Sherwood locations.

Someone needs to explain to Ms Fraser, quite urgently,  that we're no longer enjoying a frothy bull-market here in Brisbane and that prices have actually fallen sharply since the peak just over 12 months ago. Perhaps she limits her reading to the likes of Mike Matusik, Queensland's most famous property cheerleader, er, expert. Who knows.

The good news for Ann-Karyn, is she's not (entirely) alone when it comes to egregious levels of delusion. Nope, there are plenty of other characters out there who clearly revel in spending endless fruitless hours on a Saturday showing people round properties that don't have a cat in hell's chance of selling at the advertised price (or anywhere near). These hardy folk will be exposed in future Spruiker's Folly columns. Until then....

Friday, June 3, 2011

Burbs Property Sales Update: 4th June

Reasonable news this week, even if it didn't quite match the success of last week:

There were 5 sales in the $500k+ category for the Burbs and Surrounds, as per Courier Mail. There were 2 other sales above 500k that didn't appear in the Recent Sales list that I know of. Of the 7 in total, none were over the $1m mark. As of today there are 634 properties on the market over 500k (last Saturday there was 635). All in all then a reasonable week.

Good news for Brisbane as a whole: there were 6 sales in excess of $1m, equalling the most I've ever seen listed in a single week.

Of note:

17 Clara Street, Corinda: finally sold. This is the original Queenslander that stood on a  block that was subdivided twice. 17 Clara originally came to market with a price tag of over $1m. It sold this week for $600k. The banks finally ran out of patience, it seems.

18 Consort Street, Corinda: this property achieved a maximum bid of $1.2m at last weekend's auction is now on the market at $1.5m. Quite a shocking result for the agent who should have ensured prior to the auction that the 'interested parties' actually had the budgets to reach the reserve. Quite clearly neither of the bidders were even close.

In today's CM Property section there is a headline trumpeting Ray White Toowong's "100% Auction Clearance Rate" at an event at the Toowong Rowing Club on Wednesday evening. Impressive stuff indeed. Further perusal of the article reveals that Ray White Toowong auctioned a massive 3 properties at this event. Hats off to Australia's finest!

Pamela Bennett, the REIQ Chairman, writes in today's paper that buyers would be "hard-pressed to encounter better opportunities than the ones presently available." Sadly, Ms Bennett doesn't answer the one question that's on every buyer's lips at the moment: how do we know we're even close to the bottom yet? Who's to say we don't have another 24 months of falling house prices ahead of us? Perhaps someone can answer that question at the upcoming housing seminar that the REIQ is organising ...

Thursday, June 2, 2011

Infamous Spruikers Become Desperate

Anyone who received Pete 'n Brad's latest market update will have been treated to the mutterings of a blogger called John McGrath (who he?). In short, his thoughts consist of the following:

- the doom-mongers are wrong
- housing weakness will be short-lived
- prices are set to double again in the next 8 years
- commodity boom
- we're the lucky country
- er, that's it ...

No mention of anything that's fundamental to house prices in the real world like, um, high and rising interest rates, dreadful affordability, record personal debt levels. Nope, things are going to remain good because "we're the lucky country" -- and no doubt Mr McGrath is looking forward to the visit of Father Christmas a bit later on this year, not to mention his fairy godmother.

There's no surer way to destroy any ounce of credibility you have as a property 'expert' than by wheeling out the "lucky country" line. Just wait till the commodity boom turns to bust after China decides it should give up building whole cities that no one lives in.

P.S. Tomorrow sees the weekly update and an initial take suggests we had another decent week for sales. The number of properties in the $500k+ bracket appears to have stabilised, which is good news. The bad news is that the $1m+ bracket is not showing much sign of life. Underlying demand for property in our district is definitely strong but it's the cheaper end of the market that's keeping things half respectable.

Saturday, May 28, 2011

Burbs Property Sales Update: 28th May

Great news! This past week has seen a sharp rise in the number of sales in the Western Suburbs according to the Courier Mail. The property section reports 9 sales over $500k, which is 3x the recent weekly run-rate. However, I mentioned in a recent post that a sales rate of 20 per week was needed to bring current 'supply' back to a more normal six months' worth.

There were no sales over the $1m mark.

The bad news is that the number of houses for sale in the Burbs in the $500k+ bracket has risen to 635 from 620 during the same period, so this blockbuster rise in sales has been swamped by new supply.

Auction news:

139 Queenscroft, Chelmer: Was bid up to $1.35m (with some arm-twisting) and was passed in on a vendor bid of $1.5m. By all accounts the price the vendors want (or have been promised by a bullish agent) is well north of $1.5m.

18 Consort Street, Corinda: The advertising campaign for this property was one of the most high profile (read: expensive) I have ever seen, with large ads appearing in several issues of the Brisbane News, B-Mag and the Courier Mail. The bidding kicked off at $1m and headed to $1.2m, with the original bidder dropping out early on, leaving two others to take it up to the $1.2m mark. Here it stalled and the property was passed in on a $1.4m vendor bid. The vendor is apparently committed elsewhere, so it'll be interesting to see how this plays out, if this is the case.

The vendor bid at $1.4m points to expectations of $1.5m+, which further supports my view (alluded to in a previous post) that the current gap between vendors and buyers is still substantial i.e. 20% plus and also supports the view from abroad that the extent of the over-valuation in the Australian market could easily be up to 40% (The Economist reckons c.50%). The consensus is that the market will remain difficult throughout 2011, with no real view of what 2012 holds, so the end to this weakness is some way off yet. However, if we continue to get stronger sales data across successive weeks, it will be a good sign for sure.

Monday, May 23, 2011

Burbs Property Auction Update: 21st May

149 Graceville Avenue

This is a new house, obviously built by a developer. It was likely flood affected (during the building process) albeit to a limited degree. As with so much of this type of property it is on a small subdivided block with a near identical house next door (No. 147), which will undoubtedly be on the market the moment 149 is sold.

I was unable to attend this auction but it did not sell as today it is listed as Price on Application according to the realestate.com.au website. Prior to the auction announcement it was indicated at $875k. The developer cannot accept a knock-down price for 149 as it will simply set a benchmark for 147 and likely wipe out a large portion of the budgeted return. That said, given the abysmal state of the market right now, this really needed to sell on Saturday -- there is most likely a large and expensive loan outstanding on the project. The risk is that this home sits on the market for endless weeks/months as the market deteriorates further and the financing cost eats into the potential return or indeed simply enhances the inevitable loss.

For now though, the valuable 'optionality' for the developer in waiting will mean he won't be prepared to pull the pin just yet.