A CONTRARIAN VIEW OF REAL ESTATE

A CONTRARIAN VIEW OF REAL ESTATE

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We all know what has happened to house property prices in Australia and globally as of late. In Brisbane, house prices over the last year have gone up by about 30% and units by over 14%. While there are a number of reasons, the main one for strong growth has been low supply and strong demand.

Current supply (houses available for sale) in Brisbane is down by about 25% from last year. Lower stock coupled with strong demand means higher prices. Despite the recent flooding, we expect demand for Brisbane property to remain strong, especially flood free properties. There is no doubt that prices of properties that were flood affected will see a short- term dip but they will rebound over time.

The price of building materials has increased dramatically since the start of the pandemic due to a break down in the global and local supply chain. In real estate, we know that it is the land component of a property that goes up in value as buildings depreciate over time. However, as building material costs and building costs have soared, what this means is that, undertaking renovations and building new homes are costing a lot more and in many cases who knows how much more.

This brings me to the point where I see many properties being actually undervalued despite the recent increase in property prices. This is because in most instances, it would be far cheaper to buy an existing home built in yesterday prices than it is to replace the home and buy the land with today and tomorrow prices. Some may think that house prices are too high. Try building the same house on the same block of land.

There are many properties and developments which would not be built today because they are now not the highest and best use of the land. Some of these properties offer good value in my opinion. Many don’t realize just what good value there is out there despite the perceived high prices.

One problem is that there is so much “noise” (negative news) out there.  See buying and selling property as long term decisions. Work out what’s best for your circumstance, plans and aspirations.

 

A CONTRARIAN VIEW OF REAL ESTATE  by Jonzun Lee

Jonzun Lee is a trusted Brisbane real estate consultant and Licensed Real Estate Agent. Please contact Jonzun on 0418 885 708 for further information regarding your property needs.

 

DISCLAIMER The information contained in this article is for general information purposes only and is not to be construed as financial advice or to be relied upon. The information has been collected from various sources such as RP Data.com.au, Realestate.com.au, Domain.com.au, Price Finder as well as other third party sources. Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the article or the information, products, services, or related graphics contained in the article for any purposes. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising out of or in connection with the use of this article.