Blaine Callard, CEO of Harvey Norman Ireland, recently made headlines when his Brisbane CBD sub penthouse sold for $400,000 less than he paid for it eight years ago.
Callard had been asking for offers over $2m for the 216 square metre sub penthouse apartment in the upmarket Admiralty Towers, but only managed to fetch $1.85m. Records show he’d paid $2.25m for the investment property in 2009.
Callard’s investment isn’t the only example of a Brisbane apartment that was resold at a loss. Official property searches indicate that many off-the-plan apartment high-rises completed at the start of the boom have since been resold at considerable losses – as high as 35% in densely built areas such as Newstead, Bowen Hills, and Hamilton.
According to BIS Oxford Economics, Brisbane apartment owners face a potential $4bn drop in property values over the next three years, fuelled by oversupply and a falling market. The research firm has forecasted a drop of 7% in the city’s median unit price by 2020, which would take the median price of a Brisbane unit from $392,500 to $365,025 in today’s terms.
While this forecast is a worst-case scenario, Angie Zigomanis, senior manager at BIS Oxford Economics, said newer Brisbane units were expected to lose value in the short term.
“Anyone who has bought off-the-plan now is unlikely to see a gain at all in the three years,” he told The Australian. “Those losses are bigger when you take into account the stamp duty on the purchases as well. For a lot of purchasers it means their equity has dissipated.”
Nearly a quarter of Brisbane apartments lost money in the first three months of the year, up from approximately 18% of sales making a loss in mid-2016.
Michael Yardney, CEO of Metropole Property Strategists, said buyers who’d purchased off-the-plan apartments in high-rise towers in Hamilton, Bowen Hills, and Fortitude Valley were particularly hard hit.
“This comes after an unprecedented building boom over the last five years, which created a massive oversupply of high-rise apartments,” he said. “It seems that price drops of 20 to 25 per cent are not uncommon for resales after off-the-plan purchases.”
“And things are not going to improve any time soon: Just look at the skyline and you’ll still see cranes everywhere.”
Last month, RBA Governor Philip Lowe said that Brisbane’s building boom was coming under closer scrutiny.
“We are … watching the Brisbane property market carefully, particularly the effect on prices of the large increase in the supply of new apartments,” Lowe said.
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