Well-connected middle suburbs the bright spot in otherwise soft year for Brisbane residential market: HTW
Apart from “middle-ring” suburbs well-connected to the CBD via better transport and infrastructure links, the Brisbane residential market underperformed and remained soft over 2012.
At the start of the year, valuers from Herron Todd White had tipped the Brisbane market to firm up over 2012.
However, while things “may have hardened up some towards the end of this year on the back of interest rate cuts, most of the year remained 'Tontine soft',” says HTW in its December year-in-review wrap.
HTW was “decidedly bullish” at the start of the year but said “a 10% drop across a broad range of the market is far from bullish” with investors instead keeping their heads down.
The outlook is somewhat better for 2013, with a few more investors “fronted up in November in response to the stronger rents and lower interest rates”.
However the best HTW can say about 2013 is that “maybe next year will be more agreeable”.
The only market that lived up to expectations were “mid-ring, well serviced, transport accessible localities”.
“It may seem like a lay-down misère, but frankly we think this patch has continued to be a good investment.
“Those hubs that are now much closer to the CBD in travel time due to the infrastructure boom are feeling the love.
“Once again these markets didn’t make you rich right away, but they certainly performed better than most,” says HTW.
HTW also notes some improvements in sentiment towards property in flood-affected regions of the city.
“We also made one very brave call for the coming year, and that was flood-affected property. In 2011, you could barely get a nod of recognition from purchasers when listing in a suburb that flooded, and woe betide the property that actually copped some water.
“We thought as the mud started to settle, a few speculative types might pop out of the woodwork.
“To some degree, we were right. Whilst it couldn’t be said that fortunes have been made on investing in the flood affected areas, it is fair to say that the market is becoming more comfortable with the risk."
According to HTW, the findings of the Queensland Floods Commission, which placed some blame on how the flood was managed in terms of releases and outlined some ways the effects might have been mitigated, has convinced some buyers it won’t happen again, “which means demand is a touch stronger and by this year’s end, sales were a more regular event”.
However, outside of the middle-ring and some flood-prone areas where fears reduced, the market remained soft both at the upper end of the market and at the bargain end.
“The prestige bit of the market looked lacklustre at the end of 2011, and our call was more of the same in 2012. Guess what – we were right," says HTW.
The bargain end of the market spectrum was one area HTW thought had “some real upside going into the year”.
“It always seems a given that in a soft market the really cheap stuff just can’t get any cheaper. In reality, though, buyers just continued to stay away, and if you weren’t competitive in your list prices, then you could forget about anyone turning up to the open house.
“Buyers were spoilt for choice with solid returns for not too much outlay on offer. Unfortunately the jitters prevailed and even this affordable end kept up the drag.”
Overall, HTW said that on balance the Brisbane market “didn’t fire as much as expected and some markets actually took another hit in the past 12 months”.
“In many respects the statistics show we probably weren’t pessimistic enough about 2012 when making our calls on the year ahead back in February."
