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AtD
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Re: #Article: Oversupply hits city units

#16 Post by AtD » Sun May 04, 2008 10:15 pm

I think it's the opposite, actually. The construction costs per floor are higher for a taller building simply because there's greater engineering requirements. That's if you don't factor in the value of the land.

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Re: #Article: Oversupply hits city units

#17 Post by jk1237 » Sun May 04, 2008 10:29 pm

I'm now quite curious, as to whats the optimum amount of floors of a skyscraper for a developer, in terms of construction costs, ignoring land costs (and knowing that the whole building is pre-sold). It used to depend on the value of land as to whether you go out or up, but seeing those tall buildings being built in Darwin (for a city of only 100,000, it doesnt make sense to go that high), its now confusing. I wonder what the construction costs are for that monster in Dubai.
In the last 5 years in Adelaide, 10-15 storeys seems to be the norm, but as seen in O'connell St, 6 levels seems to be much preferred by developers over 3 levels, that the ACC are limiting.

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Re: #Article: Oversupply hits city units

#18 Post by monotonehell » Sun May 04, 2008 10:49 pm

jk1237 wrote:I'm now quite curious, as to whats the optimum amount of floors of a skyscraper for a developer, in terms of construction costs, ignoring land costs (and knowing that the whole building is pre-sold). It used to depend on the value of land as to whether you go out or up, but seeing those tall buildings being built in Darwin (for a city of only 100,000, it doesnt make sense to go that high), its now confusing. I wonder what the construction costs are for that monster in Dubai.
In the last 5 years in Adelaide, 10-15 storeys seems to be the norm, but as seen in O'connell St, 6 levels seems to be much preferred by developers over 3 levels, that the ACC are limiting.
The return per occupancy is more based on the market. That is how many units you can shift. It's no good building a building that has 40 stories if you're only going to be able to sell 20 of them. Oversupply brings down the price per unit, while the cost per unit remains about the same (or increases as engineering costs rise with taller buildings). That's why most buildings only go so high. The exception is that new spire living (Is that the name?) where the marketing is trying to sell units by creating demand for tower living as a status symbol. A bit like how the car industry created the market for luxury 4wheel drives as a status symbol.
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Re: #Article: Oversupply hits city units

#19 Post by jk1237 » Sun May 04, 2008 11:21 pm

no no, what I mean is about engineering costs. Lets say you have 150 units already pre-sold, at 5 units per floor. For the developer, what is the optimum height to build at in terms of contruction costs: one - 30 storey building, two-15 storey, or three-10 storeys buildings next to each other.

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Re: #Article: Oversupply hits city units

#20 Post by Pistol » Mon May 05, 2008 12:05 am

muzzamo wrote:Pistol we are in the middle of a real estate bubble.. I wouldn't be too smug about my capital gains if I were you because its likely to come crashing down as it is in every other western country.
I really didn't think that I was being 'smug' tbh.
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#Article: East, west streets ahead in slow market

#21 Post by AG » Mon May 26, 2008 7:03 am

East, west streets ahead in slow market
ANTIMO IANNELLA
May 26, 2008 12:30am
HOUSE price growth in Adelaide's northern and southern metropolitan areas is falling behind the eastern and western suburbs as the housing market slows.

Figures from housing research company RP Data show median house values in the north and south increased by about 20 per cent in the past year, nearly 9 per cent behind Adelaide's eastern suburbs, which rose by 28.98 per cent. In the same period, house values rose by 24.39 per cent in the western area.

RP Data residential research director Tim Lawless predicted the gap would increase by up to 12 per cent over the next year.



"The mortgage belts are experiencing pain at the moment because of interest rates and I think now we're starting to see the first signs of Adelaide really slowing down in the outer suburbs," he said.



Real estate agent Anthony Toop said he had noticed the bottom end of the market had slowed in the past couple of months.

"The mortgage belt areas are being affected more than the trendy inner suburbs by interest rates and petrol prices," he said.

However, Mr Toop said now was the right time to buy.

"Some are tipping interest rates might actually drop next year and if that happens, SA is well-placed to kick on," he said.

Real Estate Institute of SA president Robin Turner said inquiries were down across the board and capital growth in the inner suburbs would always surpass outer metropolitan areas.

Tony and Van Waterman just bought a three-bedroom house in Golden Grove for more than $400,000. Mr Waterman said he thought houses in the area were holding their value, with little indication the market was slowing.

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Re: #Article: East, west streets ahead in slow market

#22 Post by muzzamo » Mon May 26, 2008 8:09 am

The real estate agents come out to try and trumpet their horns again.

We are starting to see a major correction in property, its happening in every other country in the developed world.

The Real Estate agents (who this article is effectively written by) actually need volume not high prices in order to make money. The real question is when they will start to change thier tactic to talking down the market in order to make people panic and sell rather than trying to put spin on the gains of 18 months to 6 months ago in order to entice people into panic buying.

The IMF recently said there is at least a 30% difference between what property in Australia is intrinsically worth and the prices that it is selling for. My guess is that the next interest rate rise (which will actually be driven by high fuel costs feeding inflation) may be the straw that broke the camels back for us... interesting times ahead.

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Re: #Article: East, west streets ahead in slow market

#23 Post by Wayno » Mon May 26, 2008 9:08 am

There was an interesting article in the weekend Fin Review about fuel-price driven housing demographics (the article focused on all industrialised countries, not just Oz).

INNER SUBURBIA: People living in inner-suburbia are gravitating towards catching public transport (due to the price of fuel, cost of parking, interest rates, etc). Many in inner suburbs are also now considering PT as a way to directly help their hip pocket, and coincidentally help the environment too! (all without adversely affecting their lifestyle).

OUTER SUBURBIA: Unfortunately, people in outer suburbia don't have this luxury - PT typically sucks. They are more reliant on cars (typically have more cars per household compared to inner suburbs), spend a larger % of income on petrol/rego/etc, and ultimately have less cash to spend on housing. Outer suburbs are starting to be known as "Climate Slums".

Even Banks are starting to adjust their lending techniques based on housing proximity to jobs. Put simply, the further out you live the less you can borrow (comparing 2 individuals - both with identical incomes and financial histories).

The big issue is that the gap between inner & outer suburb house prices will further expand as long as petrol prices stay high. Financial and environmental divergence - a double whammy.
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Re: #Article: East, west streets ahead in slow market

#24 Post by muzzamo » Mon May 26, 2008 9:17 am

In Adelaide I don't see PT in the outer suburbs as THAT bad...

I commute about 50minutes in from Reynella each day, big deal. With public transport its a chicken and egg thing, the more people use it the better services they can provide too, so as petrol gets more and more expensive there will be busses that are more frequent and more express.

But that is not what this article is about. This particular article is the agents trying to find any excuse to pump up the Adelaide property market.

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Re: #Article: East, west streets ahead in slow market

#25 Post by monotonehell » Mon May 26, 2008 11:14 am

Interest rates are up, cost of living is high...
However, Mr Toop said now was the right time to buy.
It's a sellers' market...
However, Mr Toop said now was the right time to buy.
The end of the World is slated at next week...
However, Mr Toop said now was the right time to buy.
Why is it every time someone interviews a real estate agent it's...
...the right time to buy.
?
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Re: #Article: East, west streets ahead in slow market

#26 Post by omada » Mon May 26, 2008 11:53 am

Yeah it's funny how a dodgy real estate salesman can offer financial advice..

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Re: #Article: East, west streets ahead in slow market

#27 Post by muzzamo » Mon May 26, 2008 12:29 pm

I think i read somewhere that real estate is the only "profession" where you dont need a uni degree, but instead do a 20 hour training course.

Says it all really.

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Re: #Article: East, west streets ahead in slow market

#28 Post by monotonehell » Mon May 26, 2008 4:50 pm

muzzamo wrote:I think i read somewhere that real estate is the only "profession" where you dont need a uni degree, but instead do a 20 hour training course.

Says it all really.
Actually I was at uni with a load of people getting a degree to become Real Estate agents .. not sure how true that is?
TAFE says:
Education Requirements

Of those currently employed 30% have either Certificate III or CIV; 15% have Bachelor Degrees; 13% have Advanced Diplomas or Diplomas; 7% have a 'not defined' Certificate; and 28% have no post school qualification. In order for you to have the best possible chance of finding employment it is recommended that you gain the available qualifications.

TAFE SA offers the following courses to help you find employment in this occupation: Certificate IV and a Diploma in Property. For further information about these courses please check the TAFE SA website, http://www.tafe.sa.edu.au.

The Real Estatae Instute also offers a Certificate IV and Diploma in Property as well as a Certificate I in Residential Property Management.
Seems there's more to it.
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Re: #Article: East, west streets ahead in slow market

#29 Post by AtD » Mon May 26, 2008 5:07 pm

Wayno wrote:OUTER SUBURBIA: Unfortunately, people in outer suburbia don't have this luxury - PT typically sucks. They are more reliant on cars (typically have more cars per household compared to inner suburbs), spend a larger % of income on petrol/rego/etc, and ultimately have less cash to spend on housing.
Very true! This is why the government shouldn't be allowing more sprawl. Today's sprawl is tomorrow's slum.

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This will be popular here...the LMC

#30 Post by stumpjumper » Fri Feb 20, 2009 11:53 pm

I should say at the outset that I write out of a concern for fairness, openness and equality in the government's land dealings...

In 1973, SA premier Don Dunstan formed the SA Land Commission, intending it to make available government land ‘to those members of the community who do not have large financial resources’.

Further, ‘The commission shall not conduct its business with a view to making a profit’, declared the 1973 legislation passed by both houses of parliament.

Dunstan did not want the Land Commission to become a profit-driven entity or let it get too close to the development industry.

As the years went by, both the enabling legislation and the intentions of the Land Commission drifted from Dunstan’s vision. The legislation backing the Land Commission was subtly changed to allow the commission to seek profits for the government. The Liberal Tonkin and Brown governments began this process, and the rann government has enthusiastically continued the trend.

Land was sold to developers in private deals. The government became a ‘joint venture partner’ with developers to whom it gave access to land that the public did not.

Far from keeping the price of land low, it was in the interest of the now Land Management Corporation and its owner to keep land prices high.

It is now government policy that LMC makes money for the government.

From making no profit at its inception, in 2004 the LMC paid the government $34 million out of its profits. Its last publicly available report showed a profit of $100 million, of which $36.4 million was paid to the government from the pockets of SA home buyers. This year, with the Port Adelaide joint venture on stream, LMC will pay the government $61 million.

Any bonuses paid to LMC’s managers are not made public.

While building costs in real terms have barely increased since 1973, the cost of land has spiraled.

“Figures show that the price of land is the key to housing prices. The average cost of building a new house 35 years ago was $97,000, expressed in 2008 dollars. Today it’s virtually the same at $102,000. The unaffordability is in the land component.
In the 1960s through to the 1980s, the median Adelaide house price was three times the average annual wage. Today, a house and land package costs six times the average yearly wage. The price of building the house itself is practically unchanged.” - Independent Weekly 26/7/08

In 1973, the government’s Land Commission was selling serviced building allotments in development areas on Adelaide’s fringe for an average of $16,000 in today's money! Equivalent blocks now cost in excess of $160,000 (to private buyers, not to large developers). A tenfold increase, due to restricted supply. And LMC controls supply of vast tracts of this type of land. So a fringe block of land which used to cost half the price of a Holden now costs 5 times the price of a Holden. The price of land has also risen dramatically in relation to earnings. Hence the unaffordability factor, making Adelaide the least affordable of Australian cities for housing. The government is keeping it that way.

The property industry benefits, the government benefits, and the index of housing affordability creeps ever upwards.

The ‘directors’ of ‘SA Inc.’ – Rann, Foley, Conlon et al, stand very close to the development industry. Whether they are too close should be examined, in the public interest.

Check out the thread at:

http://www.sensational-adelaide.com/for ... f=4&t=2243 for some startling affordability facts and figures.
Last edited by stumpjumper on Sun Feb 22, 2009 5:46 am, edited 3 times in total.

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