Brisbane unit market oversupply?

Hi there

Welcome aboard.

Are you sure this advice is coming from an independent buyers agent working for you or is it coming from a property marketing company that sells OTP property and reaps sizeable commissions?

Cheers

Jamie

Hi SAH,

My main question was about the new unit market? Any thoughts,

Although Units often have a Gross Rental Yield higher than houses, their Nett Yield is not often positive unless you buy very well. And purchasing OTP is not usually the way that one finds positive yields. I’d be interested to see if these ones are any different – can you share some basic numbers? (price, rent, Body Corp costs, number of units in block)

CBD’s have a habit of offering many units in bulk, often leading to oversupply and a pullback in rents. Consider too, that many NEW apartments are sold to the overseas market. If for any reason they then need to sell, other overseas investors CAN’T buy them (as they are no longer new, so second-hand sales are into a smaller market.

I choose to stay away from that area – but if buying at a greatly distressed price it might work out. Give me houses first any day, or units in small boutique blocks if/when price is favourable.

Benny

Hi there,

Off the plan and Independent Buyer Agent – thats humerous. OTP is driven by commisions – agents are severely blinded by the comms and for me i’m seeing this ripe in brissie. Not seeing many good options in the apartment market at all.

Cheers, Ivan

Hey safe,

Some of these guys who’ve commented have been around the block a few times and have had to unravel problems that people commonly get themselves into when buying new or otp. Independence of buyers agents is a big one and the property type you’re describing is high risk for this sort of thing. It could mean 40k to the bottom line in any deal. In my mind this would have a big bearing on whether an investment is priced right for investment purposes and I would be thanking them for their input.

As to the location I’m not familiar with it. But if there is a forecast for significant more supply and the rental market is already softening you’d have to question the fundamentals of what you’re looking at. Are there significant changes in the local infrastructure or economy that would bring people in to compensate for this?

anyway, good luck with it.

Andrew

Avoid CBD and Inner City Units as there will be an oversupply of units when they all come to market.

Anything within 8 kms should be fine but personally i would avoid new properties.

I have just sold a block of 18 units in a Inner Western suburb which i purchased in 2002 for 1.8 M and sold for 5.8 M settling in October 14. Whilst i renovated them when we first purchased them the the growth has been more than encouraging. Rental demand was always good.

Certainly I would not have purchased a Queenslander for an investment given the higher upkeep costs so a well placed unit should help balance the books.

If you were a BA client of ours we would suggest a smaller established block (under 8 units) with 2 bedrooms close to transport.

This way the Body Corporate has been established and you have a good track record of the past expenses and can assess the sinking and administration funds.

Cheers

Yours in Finance

• This reply was modified 9 years, 10 months ago by  Richard Taylor.