Oversupply Sees Brisbane Unit Sellers Take a Haircut

27 Jan 2020

Hey everyone, below is a great report in the Australian Financial Review by Nila Sweeney

 

“An apartment at 42 Wyandra Street in Newstead, 3 kilometres north of Brisbane’s CBD, was sold for $115,000 below the purchase price, five years after the owner bought it as new.

The two-bedroom, one-bath, one-car space apartment was purchased for $610,000 in March 2014 and was sold for $495,000 in July last year, inflicting an 18.85 per cent loss on the vendor.

Brisbane-based buyer’s agent Zoran Solano of Hot Property Buyers Agency said Newstead has been struggling with the oversupply of new apartments, which contributed to the lower sale price of this unit.

“This particular pocket of Newstead has had a significant amount of new units and apartments, which would have subdued the price point,” he said.

“If the owner purchased it brand new, there’s also a built-in premium and it wouldn’t be unrealistic to think that the owner overpaid for this apartment in the first place.

“Basically they’re taking a 20 per cent loss, which means they’ve lost all the deposit. That’s a lot of money.”

Mr Solano said the timing of the sale did not help either.

“It was a bad time to sell because the market was still very slow and it was still digesting the federal election results and changes to the APRA lending regulations.”

Another Brisbane property that was sold below the purchase price was an older unit in Boundary Street, Spring Hill, located 2 kilometres north of the CBD.

The two-bedroom, one-bathroom, one-car space unit was sold for $323,944 around July last year – $31,056 lower than the purchase price.

The owner paid $355,000 in September 2009 and despite the long hold period, the property failed to grow in value.

“Spring Hill has a lot of new apartments so an older unit like this will struggle to compete, especially if it’s not well-maintained,” said Mr Solano.

“Although the apartment market was very poor for the last 10 years because of the oversupply, investor-owned older units need to keep the maintenance and presentation up as high as they can, because they’re competing with brand new property.”


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