From The Oz:
MIRVAC Group has wiped $273.2 million off the value of its development projects on the back of weak conditions in Queensland’s apartment market.
…Mirvac said that sales and prices in parts of Brisbane, regional Queensland and Perth had either fallen or stagnated.
“The 2012 spring and summer sales season was expected to provide evidence of a recovery. However, this has not materialised,” Mirvac said. “The Brisbane and regional Queensland apartment markets have experienced deterioration through greater price discounting, particularly to mid to high end products.”
Given the soft housing conditions in the past six months, future predictions on when the property recovery would occur and how strong it would be had changed, the company said.
“markets have experienced deterioration through greater price discounting, particularly to mid to high end products”
As a consequence these greater discounted mid to high end dwellings sell and voila the market price of dwellings appears to be rising.
Thank you Peter!
You have just explained the house price uptick in Perth!
Doesn’t explain ABS house prices, which covers houses only. AFAIK, Mirvac is into unit development.
Mav, Mirvac has a mix of new houses, apartments and land. Gainsbourough Greens alone has 2000+ houses.
oh ok. then I stand corrected.
“Analysts said the majority of the write downs were in the apartments sector with the land impairment being focussed on one project between Brisbane and Gold Coast”-SMH
Coincidentally, project (copping the write downs)refered to above may actually be Gainsborough Greens
Talking about apartment sales, got this advertising crap in the mail today for new apartments in South Brisbane:
New 1 bedder apartments in South Bank – the upcoming Arena release – starting from a bargain basement of 370K.
http://www.arenasouthbrisbane.com.au/home.aspx
Note the Chinese language option. Must be looking for corrupt CCP money as well. I thought Harry “100 million march” Triguboff already had that strategy all wrapped up?
Who is buying this overpriced crap? I have lived in this area in the past and worked on the riverfront etc.
Trust me, the heavens definitely didn’t open up, nor did the angels sing, which is what you expect for a 400K concrete pillbox that would have Bradly Manning scratching the walls like a blind rat in a fit of claustrophobia.
The only explanation I’m afraid is that PEOPLE ARE NUTS.
People will continue to buy these apartments as long as the rents can support prices. Rents will continue to rise as less people want to buy and more people demand rental accommodation.
In that particular area of Brisbane two people earning an average wage of $1,200 a week could both put in $200-$250 each to live in 50m2 1 bed apartments. That leaves a lot of income to pay for those coffee’s and eating out every night.
http://faculty.ncwc.edu/mstevens/111/111lect12.htm
“The average prison cell built today is at least 70 square feet (7×11 or 8×9).”
70 square feet is around 6.5 square metres.
Your apartment size (50 square meters) translates to around 538 square feet: your 400K pillbox is thus around 7 – 8 jail cells in size. Roomy.
And it only takes half an average person’s lifetime wages after tax to pay, not including the economic rent (interest) of the banking cartel on top! Bargain.
QED.
I am just saying from a pure yield play its not too bad.
Yes it is gross but after a couple of years it will be neutral and then you can leave it for the next 10 years.
If someone at the age of 30 does this by the time they are 45 they will have an almost paid off property. Do this twice at the same time and you could live a modest life on the rent for the rest of your life.
I personally am bearish on property but I would find it more exciting to tip savings into a property than into a bank account.
I’d find it extremely exciting to tip my savings onto the roulette table.
I probably won’t do it though.
An investment you can leave for 10 years doesn’t sound very exciting at all.
Not CAN leave. HAVE TO leave, like it or not.
Will the property be paid off in 10 to 15 years? Also what are the costs of holding an apartment especially as the building depreciates? Is it the same building in 15,years as it is now? What does an apartment owner actually own? Land – no, interest in part of land? Or just something 10 floors up?
Pretty poor asset ownership model I reckon! Not even a real exit strategy is available!
Fast (back of a postage stamp calculation) re Mirvac Annual report
QLD investment assets were @ $800 million
Inventory was @ $1.45 billion
They just wiped $273 million off development projects
I’ll leave you to do the math on the… ‘MSM prices are rising index’
Sorry Peter. Not following you.
Well if apartment development is ‘inventory’ then a a near on 20% price decline since the Directors signed ‘acounts present a true reflection’ on 21st August 2012
Gotcha
Mirvac will continue to flounder as it tries to offload this boom time, stale stock.
Most if its apartments are too big, at too high price points and are of only marginally better quality than those of its more nimble competitors. Smaller, no-frills units are selling in Brisbane, not oversized strata encumbered with high levies for unnecessary luxuries.
If Mirvac was in the car trade it would be offering 2006 vintage V8 Holden Statesmans when the market has moved onto turbo diesel SUVs.
More write downs to come. Perhaps from its $2 million – $4 million townhouses in Port Melbourne overlooking the docks and adjacent to a major truck route in a market where nobody can see any upside.
re the car trade comparison I see it more as Mirvac as trying to sell brand new commodores for $50k when there are thousands of last years models is on carsales.com for $25k in good nick
No such thing as a last year model commodore in good nick! Trust me Holden as burned me big time. Never buy an Australian made load of crap again in my life.
FINALLY!! The first of the land-bankers to announce a write-down. Can the rest with large holdings in QLD: Stockland, Lend Lease and QM Property, be far behind??
Land in the Gold Coast is up 300% in the last 10 years, that’s a-long-way for it to fall back to reality!
You might enjoy this.
http://www.propertyobserver.com.au/land/stockland-exposed-as-gold-coast-house-and-land-activity-falls-to-worst-level-in-30-year-low-prodap/2013020659196
The Gold Coast house-and-land market has sunk to its lowest level in over 30 years.
Residential land and house-and-land packages sales totalled just 980 for the full calendar 2012 year, compared with a long-term average sales of 4,200 per year since 1995, according to the latest quarterly Prodap Report.
This is particularly bad news for developer Stockland, which is selling residential lots and house-and-land packages in six residential communities on the Gold Coast and has 35% of the market.
According to the Prodap Report, the three biggest residential development projects on the Gold Coast are all Stockland projects.
Unless the dollar drops or we see a big spike in housing values the Asian buyers are going to be keeping clear.
It’s hard to see a recovery without overseas investors.
Sounds like they are only half way there!!!
hasn’t even started yet.
If only people refused to buy at these prices – I mean if NOBODY bought at these ridiculous prices so we could just get on with this overdue housing crash.
“The sad news is that not even record low interest rates seem to have had any effect on the volume of sales. Sad but true,” says Morris, who adds that a reduction in council infrastructure charges had no effect on new production.
Morris says the problem is that established houses are cheaper and in many cases better located than new houses.
“In other words, replacement costs are higher than the price of older homes.
“Why is this so? Land prices are still too high, representing more than 50% of the price of the average home. This was not case 10 years ago, when the average serviced block cost $60,000. In 10 years that has risen to $220,000, almost 300% or 30% per annum” says Morris.
Morris says land prices have escalated out of all proportion to house prices over the past 10 years.
Well oh my lordy who would have thunk that? Maybe a much lower price would encourage buyer demand!
Oh I forgot, that would mean all the specuvestors, land bankers, banks, take a huge hit.
My mail is that there’s very little debt for land bankers/developers in Melbourne ATM. There must be a few on their last bottles of oxygen down here.
And that’s the money shot right there.