West Brisbane Property Watch Q4 2011

The following Property Watch is the result of an investigation into the housing, unit and vacant land markets comprising the suburbs of West Brisbane as depicted on the map to the right. The purpose of this report is to identify trends influencing this regions property market in recent years and factors contributing to this markets competitive environment. For the purposes of this report, the suburbs identified in the West Brisbane catchment area range from as far north as Mitchelton, as far west as Lake Manchester, as south as Forest Lake, and as central as Paddington.

Area Characteristics
West Brisbane is a diverse market, ranging from the trendy inner city suburbs that cater for the young working professionals, such as Paddington, Red Hill, Milton and Auchenflower, to the large acreage estates in Pullenvale and Upper Brookfield. West Brisbane contains the University of Queensland, which provides a steady source to the rental market in the St. Lucia, Taringa and Toowong area. The suburbs of Indooroopilly, Kenmore and Mount Ommaney offer large shopping centres, which tend to favour families. Although public transportation is a work in progress in Brisbane, the western suburbs have access to the Logan M otorway , Ipswich M otorway , Centenary Highway, Ipswich Railway , City Cat, and a wide range of bus services, which link up the multiple business and industrial centres of Toowong, Milton, Seventeen Mile Rocks, and Mount Ommaney.

House Market
The West Brisbane house market recorded a peak in the median price of $530,000, during the June 2010 half year period. In the year to June 2011, the market has experienced a steady price correction to reach a final median price of $510,000. This resulted in a decrease of $22,000 from the previous year which may be largely attributed to a noticeable downward trend in sales activity and a change in the transacted price points since the June 2010 half year period. For the past two six month periods ending December 2010 and June 2011, settled sales have decreased by 170 transactions for each period, translating to a softening of 14.1 and 11.3 per cent respectively.

Price points in the year to date have shifted towards the lower end of the spectrum, with activity below $600,000 increasing by 4.6% to represent 70 per cent of total settled sales, while activity above $700,000 has decreased by 5 per cent. This shift in activity is likely to be a result of poor business sentiment and consumer confidence stemming from global e conomic uncertainties, local inflation and subsequent increases to interest rates.

Despite the Governments efforts to stimulate the market with the introduction of the Building Boost Grant in addition to the First Home Owner Grant and a recent cut in the official cash rate by the RBA in November this year, the prospects for the housing market are likely to remain subdued until such time confidence re-emerges from both investors and owner occupiers. All but two of the top ten most active suburbs in the study area registered negative annual growth in median price with Paddington and Keperra achieving 4.6 and 0.7 per cent respectively. Paddington also registered the highest median price out of the ten suburbs recording a final median price of $860,000. It is interesting to note that all 10 suburbs are situated along the eastern periphery of the study area, with six of the suburbs grouped to the north, two in the centre and a further two to the south. Forest Lakes dominated sales activity for the year with 171 transacted sales and outperformed neighbouring and third placed Inala by just over 90 sales. Located on the opposite side of the study area, Ashgrove placed second with a total of 93 sales.

Unit Market
The West Brisbane unit market caters for a wide range of residents, from the youthful university students, to the empty nesters that require a low maintenance lifestyle. Similar to the housing market, the West Brisbane unit market appears to have experienced a slightly steeper correction in median unit price during the year ending June 2011, to register a final median price of $380,000. This reduction of $35,000 during the year again corresponded with a decrease in sales activity which recorded 160 less transactions during the same period. Liken to the house market, price points in the year to date have shifted towards more affordable stock, with just under 53 per cent of all sales recorded in June 2011 occurring within the price bracket of $300,000 to $399,999. Activity within this price bracket has increased 12.3 per cent from the previous year suggesting a price sensitive market. The average annual capital growth rates experienced in both house and unit markets has trended towards levels recorded a decade ago. It is interesting to see not only the synchronicity between both unit and house markets over time, but the closing gap between the level of capital growth experienced in both markets (i.e. the difference recorded in December 2003 was 8.6 per cent compared to 1.1 per cent recorded in June 2011). This would suggest that demand for units over time has increased intensely which has put pressure on values and subsequent capital growth.

Land Market
Supply of vacant land in West Brisbane is becoming increasingly scarce and virtually non-existent in most suburbs, with the underperformance of the comparatively land rich suburbs of Doolandella, Forest Lake, Moggill and Upper Kedron contributing significantly to a decrease of 109 settled transactions during the six month period ending June 2011. This has had severe implications to the final median price of $ 250,000, which has experienced a steep decline of $50,000 from the previous half year period. The acute decrease in the median price is believed to be a result of a substantial decline in sales activity and in some instances value across the area, particularly among the more affluent suburbs and those affected by the January 2011 floods. Fig Tree Pocket provides a perfect example in which sales activity decreased by 60% per cent from the December 2010 half year period and the average dollar per square meter dropped $ 82, which may be largely attributed to the extent of the floods in this suburb.