Warning for unit investors with price plummet prediction

THE warning signs are flashing for one real estate sector in 2017 despite others performing the best they have in years and it's not going to be pretty.

The warning signs are flashing for one real estate sector in 2017 despite others performing the best they have in years and it's not going to be pretty. Picture: Ian Bracegirdle

WHEN Brisbane catches a cold the Sunshine Coast will get the sniffles is the frank assessment of the future of the region's accommodation unit market as the Queensland capital heads towards a sharp downturn in 2017.

Professor Chris Eves from QUT's Property Economics, Science and Engineering Faculty is predicting Brisbane prices will falls will by up to 40% depending on location with the CBD the most vulnerable because it is the least attractive to domestic purchasers.

He says the numbers speak for themselves.

In each of 2012, 2013 and 2015 the Brisbane market absorbed 1600 units a year.

"As at last week there were 6000 units on the market and a further 6000 available for rent,'' Prof Eves said.

"When you look at apartment blocks in the CBD at night there aren't many lights on."

He said the Sunshine Coast couldn't expect there would not be a flow on affect here although the Gold Coast relied more heavily on the Brisbane market.

Prof Eves said there was a percentage of the Sunshine Coast population which commuted to Brisbane who may look to the slump as an opportunity to buy into the city market and move there where previously they had been priced out.

He said however while the idea of inner city living may look attractive, for locals the experience sometimes was less so.

And he said when it cost $700 a week to service a mortgage on a two-bedroom inner city apartment, renting for $250 in the outer suburbs retained a lot of appeal.

"That's why when those markets hiccup, they really feel it,'' Prof Eves said.

Sunshine Coast agents have mixed views on the state of the market here.

Kevin Annetts of Kevin Annetts Property in Mooloolaba said while there had been little price movement for units he was witnessing the appearance of owner-occupiers into the market who were seeing value in larger units in good positions.

New Zealand buyers were also returning for the first time since the Global Financial Crisis, and also finding value.

"A seventh floor unit in Mooloolaba for $700,000 is being seen as extremely good value compared with the same product in Aucklan where it is priced at $1.5m,'' Mr Annetts said.

"The economy there has been going extremely well and cashed up Kiwis see value in our market.

"There's been no price shift but property that has been on the market for a long time is now shifting."

John Anderson of Property Today says unit market prices have remained flat for the past 12 years.

He said the home market was much stronger with buyers lapping up stand alone homes on small blocks.

Mr Anderson agreed with Professor Eves that market problems were expected in the fall out from the looming Brisbane market collapse.

In comparison he said a two-bedroom beach house in Oloway Crescent at the back of Alexandra Headland had sold this week for $575,000 while a Brentwood Avenue, Mooloolaba home had sold for $950,000.