Bargain-hunt buyers bussed in as Brisbane unit sales fall over- by Turi Condon, Property Editor
The wave of new apartments flooding the Brisbane market has spawned property tours in which bargain hunters are bussed to newly built projects where defaults — largely by Chinese buyers — have led to units being put back on the market at deep discounts.
Agent David Beard ran his first tour last month and will next month take another coachload of potential buyers to see about 50 distressed units across four inner-city projects.
“The locals can come and collectively hunt in packs and they can pick up the deals,” he said.
A Chinese government clampdown on money flowing out of the country, coupled with Australian banks tightening investor lending and their bans on certain postcodes heading for an apartment oversupply, has hit the Brisbane market, where 9000 units are due to be finished this financial year. The Reserve Bank has over the past 12 months flagged Brisbane as a potential trouble spot.
“If you had a project that was predominantly sold to China, you would have a headache,” Mr Beard said.
Discounts of up to 20 per cent below the off-the-plan price are available on units where buyers have failed to settle or where developers are under pressure to clear stock, he said.
“There is a default unit — two bedrooms, two bathrooms — that sold off the plan for $530,000, take off 19 per cent. It’s selling for $440,000-$450,000.”
Most of the apartments are small and aimed at investors. According to an ad for what in the global financial crisis were called “vulture tours”, Mr Beard’s company, Australian Property Tours, spruiks a one-bedroom, one-bathroom unit 2km from the CBD “now $349,110, was $431,000”.
On defaulted apartments, developers are using the forfeited 10 per cent deposit to cut prices, and then discount further, he said.
Mr Beard’s clients are about one-third first-home buyers, one-third empty nesters and a third investors. “It was the interstate and international buyers that were keeping the first-home buyers out of the market,” he said.
The year to June will see the peak of apartment completions in Brisbane, with 9000 units finished and due to settle. The previous year saw 6500 units built and next financial year will see the same figure completed before the building boom tapers away, according BIS Oxford Economics senior manager residential, Angie Zigomanis.
Analysts have cautioned that apartment vacancies in Brisbane will rise, but at the moment they remain low.
“Brisbane compared to Sydney and Melbourne will probably take the biggest hit from a price perspective,” Mr Zigomanis said.
Mr Beard expects the same issues to emerge in Melbourne, Sydney and on the Gold Coast after the Commonwealth Games, with plans for property tours in those locations.
There is more pain to come, he said, describing the banks’ valuers as “ruthless” in their assessment of a unit’s worth ahead of settlement. The bank may then lend less, leaving the buyer to fund the shortfall.
He declined to name the projects to be included in the next bus tour but said they were inner city or close by. “There are two projects where there are defaults and two where the developers will do a deal,” he said.
However, the projects were not in Fortitude Valley or West End where the biggest wave of unit development has taken place.
“Fortitude Valley, they have gone crazy there,” said Mr Beard, who expects to work in these areas in the future.
In the nascent stages of Brisbane’s unit boom, marketers ran tours for Chinese buyers.
Now the tables have been turned.
“We had been doing one-on-ones and thought ‘why not hire a bus and have some fun’,” Mr Beard said.