Blaine Callard, CEO of Harvey Norman Ireland, recently made headlines when his Brisbane CBD sub penthouse sold for $400,000 less than he paid for it eight years ago.
Callard had been asking for offers over $2m for the 216 square metre sub penthouse apartment in the upmarket Admiralty Towers, but only managed to fetch $1.85m. Records show he’d paid $2.25m for the investment property in 2009.
Callard’s investment isn’t the only example of a Brisbane apartment that was resold at a loss. Official property searches indicate that many off-the-plan apartment high-rises completed at the start of the boom have since been resold at considerable losses – as high as 35% in densely built areas such as Newstead, Bowen Hills, and Hamilton.
According to BIS Oxford Economics, Brisbane apartment owners face a potential $4bn drop in property values over the next three years, fuelled by oversupply and a falling market. The research firm has forecasted a drop of 7% in the city’s median unit price by 2020, which would take the median price of a Brisbane unit from $392,500 to $365,025 in today’s terms.
While this forecast is a worst-case scenario, Angie Zigomanis, senior manager at BIS Oxford Economics, said newer Brisbane units were expected to lose value in the short term.
“Anyone who has bought off-the-plan now is unlikely to see a gain at all in the three years,” he told The Australian. “Those losses are bigger when you take into account the stamp duty on the purchases as well. For a lot of purchasers it means their equity has dissipated.”
Nearly a quarter of Brisbane apartments lost money in the first three months of the year, up from approximately 18% of sales making a loss in mid-2016.
Michael Yardney, CEO of Metropole Property Strategists, said buyers who’d purchased off-the-plan apartments in high-rise towers in Hamilton, Bowen Hills, and Fortitude Valley were particularly hard hit.
“This comes after an unprecedented building boom over the last five years, which created a massive oversupply of high-rise apartments,” he said. “It seems that price drops of 20 to 25 per cent are not uncommon for resales after off-the-plan purchases.”
“And things are not going to improve any time soon: Just look at the skyline and you’ll still see cranes everywhere.”
Last month, RBA Governor Philip Lowe said that Brisbane’s building boom was coming under closer scrutiny.
“We are … watching the Brisbane property market carefully, particularly the effect on prices of the large increase in the supply of new apartments,” Lowe said.
QLD Excerpt From The 2017 October Market Report
“Unusually High” Month For Apartment And Unit Commencements
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker
Top Suburbs :
tweed heads south
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.
We value your privacy and treat all your information seriously - you can check out