Sunshine State Of Mind

Sydney Morning Herald

Thursday July 19, 2001

Harvey Grennan

Brisbane's burning as the bulls of south-east Queensland reclaim the boom.

If property analysts agree on anything it's that Brisbane and perhaps the Gold Coast are the next big things.

A stock surplus has excluded south-east Queensland from the recent boom years, but this has been running down and developers are back with a vengeance.

The region is the fastest growing in Australia, according to the Bureau of Statistics, and Brisbane is the nation's fastest growing municipality. The city's Fortitude Valley and other inner suburbs are undergoing an apartment boom. Interstate buyers, mainly from Sydney, account for 40 per cent of sales.

On the Gold Coast, hot spots include Labrador, Main Beach, Broadbeach, Robina and the northern suburbs benefiting from a new motorway to Brisbane. Unit sales were $105 million in the March quarter, the highest since the end of 1998.

Investors from Sydney and Melbourne have been burnt by unlicensed Sunshine State agents and promoters selling grossly overpriced properties, but new legislation offers some protection: since July 1 there has been a cooling-off period of five days for buyers caught by an unsolicited invitation to a "property information session".

PRD Research says the supply of units in inner-Brisbane has almost halved in the past 12 months to its lowest in five years. "We are now in a position of undersupply," it says, predicting a "future storm" of sales rising from 1,600 last year to 1,700-1,900 this year.

Scarcity was also forcing up house prices within 4kilometres of the CBD, the annual rate of increase doubling from 7 per cent to 15.5 per cent.

Forecaster BIS Shrapnel reckons the Brisbane residential property market will be the first State capital to recover (hasn't Sydney?) with increases of possibly more than 30 per cent in the three years to June 2005.

BIS Shrapnel's director of building services, Robert Mellor, says Brisbane prices are forecast to increase 8 per cent in 2002-03, compared with Canberra (5 per cent), Perth and Sydney (4 per cent), and Adelaide, Melbourne and Hobart (3 per cent). Both Brisbane and Sydney would record double-digit growth in 2003-04.

Brisbane house prices have performed poorly since 1994. "A strong rebound is forecast through to 2005 in response to the lowest level of new dwelling construction since 1986-87," Mellor says. "Rising underlying demand due to a stronger net interstate migration into south-east Queensland will lead to a significant stock deficiency by 2003."

Brisbane researcher Michael Matusik is also bullish: "It appears to us that the next cyclical upturn in the inner-city market is well under way, with the fundamentals in place for a strong 2001-02 and 2002-03.

"We do, however, have concerns about the rental market's capacity to absorb a large number of new apartments priced over $450,000 in the CBD and over $350,000 elsewhere within inner Brisbane."

Matusik believes inner Brisbane can absorb 1,800-2,000 new units a year (compared with 800 five years ago) and says recent talk of a glut is premature.

But he warns that the Queensland Government must do more to create jobs if migration from the southern States is to be maintained and the brain drain of qualified Queenslanders heading south is to be stemmed.

Sydney developer Terry Agnew has two complexes on the go in Brisbane - Tribeca and Republic - and believes the inner city and fringe markets resemble Sydney six years ago. Valuer LandMark White says supply and demand are high in the Brisbane CBD. Pre-sale levels were strong in several high-profile developments fuelled by demand from southern States. Investment units were priced between $200,000 and $450,000, well below Sydney and Melbourne CBD prices, it says. There was also a perception that these markets had peaked.

Macquarie Bank research shows prices recovering for established housing in Brisbane and on the Gold Coast from the second half of next year as southerners capitalise on the price differential between States and lifestyle advantages.

"Not a boom, but a steadily increasing market," the bank says. "In Brisbane, established houses in the near-city and bayside suburbs are the ones to watch. On the Gold Coast, riverfront and beachside sites will offer the strongest returns."

According to Gold Coast analyst Prodap Services, vacant land sales are at their highest in years, while sales of packaged housing and townhouses recovered dramatically in the March quarter from a decade low. A rush on land had hit stock levels. "New lots produced over the past 12 months totalled 2,776 and forecast production over the next 12 months is only 2,216," according to managing director Bill Morris, who predicts price rises of 25-30 per cent this year.

Valuer Herriots has reported the average house price on the Gold Coast improved 4.3 per cent and unit prices 1.4 per cent in the March quarter, with stock becoming scarce. But senior partner Iain Herriot cautions that six new high-rise developments under construction, with five more planned, are a "big ask" of the south-east Queensland market.

Big or not, Queensland property is back in business.

Interstate Property Special - pages 10, 16 and 22

Profile of a top agent

Sales soldier

The average age of the top 10 per cent of real estate salespeople is 38 years, they generate $246,072 a year in gross commissions, and their repeat/referral listing rate is 65 per cent, according to industry consultant Robert Bevan and Associates. See www.bestpractice.com.au.

Call to renovation

TAFE courses

Restoration and renovation of old houses is such big business that TAFE is running courses for tradesmen around the State in heritage carpentry, plastering, stonemasonry, brickwork and painting. For home-owners, there will be an "overview" workshop touring heritage-listed buildings in western Sydney on Saturday, August 11. $95, including lunch. Details: 9607 1384.

Banks baulk at conversions

Warehouse stay

Few people know about it, but banks are wary of lending money on warehouse conversions. The problem is not the lenders themselves, but the mortgage insurers that become involved if the loan is more than 80 per cent of the property's value. Some lenders won't touch warehouse conversions and others insist on at least a 20 per cent deposit. Matthew Ivers of broker Vision Home Loans says a few lenders will approve a loan of more than 80 per cent if the deal is "so strong" (eg, the borrower has equity in other properties) that they are prepared to waive mortgage insurance.

Storage feels the squeeze

Space stations

The demand for storage is growing as more people move from large homes into apartments, according to Spare Room Self Storage at Artarmon. "In the US, there is 0.4 square metres of self-storage space per head of population," says executive director Edgar Hung. "In Australia and New Zealand, we barely have 0.1 square metre."

Ilama marks the spot

Slick Brissie

Llama is the latest name in designer apartments. Designer Marc Newson has teamed with developers Ross Neilson Properties and Bovis Lend Lease for a slick apartment block (pictured above) in Brisbane's George Street, with plans to take the label to Sydney, New York, London and Paris. Prices for the 119 apartments, set for completion in 2003, range from $330,000 for a one-bedroom unit to $3 million for the penthouse. Features will include a "zen zone" for yoga, high-speed data cabling, private lift access to each apartment and a coolroom in the foyer to store grocery deliveries. Cramer Property Agents is marketing.