Buying an apartment in Queensland
By Alex Brooks
Q: So what does it cost to go shopping for a two-bedroom unit across Queensland nowadays?
A: A lot more than it used to.
“Units are always a staple for investors,” says Matusik Property Insights managing director Michael Matusik.
“But while they used to cost two or three hundred thousand, that’s not the case any more.”
The humble two-bedroom unit has had solid capital price gains across the Sunshine state through 2003 and 2004.
Home Price Guide figures show that median unit prices have not risen as quickly as houses, but units increased by nearly 17 per cent in Brisbane during 2004 to a median of $245,000.
Prices in South East Queensland – which is where the bulk of the population lives and works – are more expensive than the more remote towns in tropical Far North Queensland.
A unit in bustling far north Townsville had a median price of $169,250 in December 2004, while a unit in swanky Noosa on the Sunshine Coast had a median price of $440,000 in the same period.
THE GOLD COAST
Older style units without views close to the prime beach locations like Surfers Paradise start at $300,000, according to local agent Mashelle Jones, of Mashelle Realty.
“The demand here is largely for three-bedroom units, because it is all baby boomers who want to have space for their family to come and stay,” she says.
“Everyone wants a view and everyone wants to be close to the beach.”
Unit prices in Main Beach – “which is the Double Bay of the coast” – range from $500,000 up to $5.5 million, with penthouses around the $1million mark in hot demand.
Ms Jones says Labrador, which overlooks the Broadwater, has more affordable units starting at $300,000 with good quality two-bedroom units with water views selling for around $600,000.
New developments by in Southport have prices starting at $300,000 and are available off the plan.
Further south towards Coolangatta, prices are lower with a two-storey beachfront penthouse apartment available in Palm Beach for $1.35million.
Home Price Guide’s research director Louis Christopher suggests investors and sea-changers should look towards the southern end of the Gold Coast, which offers better value for money in prime beachside locations.
Mr Matusik says Brisbane is not yet oversupplied with units and has very strong rental demand, with vacancy rates at less than 2 per cent.
“I think if you stick to areas close to universities, close to transport and with amenities like car spaces, you will get a good rental return,” he says.
Cheap, two-bedroom “six-packs” in inner city suburbs like Kelvin Grove can start in the $200,000s.
“You might not see a lot of capital growth for a while, but you will have good rental returns,” Matusik says.
New unit developments are more expensive, with many costing more than $500,000 for a two-bedroom unit in a prime inner city suburb.
“The thing with Brisbane is that each bedroom is potentially worth $200 a week in rent, so you can do well,” Matusik says.
Redcliffe, the beachside peninsula just north of Brisbane, has several large apartment developments planned and Matusik and Christopher are warning of oversupply in these areas.
“People think it’s going to be the Bondi of Brisbane, but there are more than 1500 units planned and there simply isn’t the rental demand,” Matusik says.
THE SUNSHINE COAST
The stretch of coastline immediately north of Brisbane has the state’s most expensive median unit prices.
Sunshine Coast Realty principal Desleigh McDonald says the $600,000 plus price point is the most popular, but that is usually for a two or three bedroom beachfront unit.
“We are not getting so many investors as Baby Boomers who want to cash up and move here,” she says.
The cheapest Sunshine Coast town is Caloundra where units start in the $200,000s, with prices rising to more than $5million for a beachfront unit in Noosa.
Macquarie Bank’s head of property research Rod Cornish is warning that the Sunshine Coast is especially vulnerable to a downturn after steep price gains of 47 per cent during 2003.
“I think when it comes to units on the coast, it is important to invest for lifestyle and invest in an area that you think you would like to visit – you won’t see a lot of price growth for a long time, so you may as well enjoy it,” he says.
FAR NORTH QUEENSLAND
Mr Christopher says the coastal towns north of Hervey Bay are a lot less vulnerable to volatility than areas in south east Queensland.
“I think areas like Townsville are a good bet because they didn’t go up as quickly as places like Cairns or Port Douglas, which are very reliant on tourism,” he says.
Juniper marketing director David Kortlang says Sea Temple apartment resorts in towns like Palm Cove and Port Douglas cost an average of $850,000 for a premium beachfront apartment.
“Where else on the east coast can you get a beachfront with top quality design and fit out for under $1 million,” he says.
Mr Matusik says the towns of far north Queensland have a variety of quality new apartment developments on offer, ranging from $300,000 up to more than $1 million.
“I think a lot of those developments are very good, but in most towns only a handful those developments will do well and that will be the ones in prime positions,” he says.
He says Townsville, Cairns, Airlie Beach and the Whitsundays are performing well, and that success is filtering to the smaller towns such as Mackay.
“Unlike Sydney, Queensland still has some growth in it yet,” he says.
“Even though the purchase price is higher than it was, you can still get more for your money here than you would pay for a laundry in Sydney.”
Garry Caripis is a Sydney property investor attracted to new buildings in prime locations that will attract long term tenants.
Mr Caripis owns three apartments across Brisbane, eschewing regional Queensland coastal towns in favour of city locations that have strong employment and population growth.
“I’m just a bit wary of places like the Gold Coast which have massive apartment towers,” he says.
“I think those kind of places attract itinerant tenants rather than someone who wants to stay for a long time and look after the place.”
Mr Caripis has just bought a two-bedroom riverfront unit for $525,000 off-the-plan in Multiplex’s Portside development in inner city Hamilton, even though he would prefer to invest in Sydney.
“I’ve started thinking about getting in to something here in Sydney but I am just so annoyed about the investors tax that I thought: stuff it, I’m going north,” he says, referring to last year’s NSW state government introduction of an exit duty for investment apartments.
“You should only have to pay stamp duty once, as far as I am concerned, so investing up north is a bit of a political statement for me.”
Caripis owns apartments in the inner ring of Brisbane in Southbank, Westend and Portside.
“I want something where you can maximise your depreciation benefits and hold on to it for five years or more and get some capital growth,” he says.
“I think Brisbane has a bit more growth in it before everything quietens down.”