In Brisbane property this month, it has been described as the “busiest January in a decade” by some real estate sales agents, and we certainly agree with this statement, writes Melinda Jennison.
Right from the first Saturday in January, we have witnessed record numbers of people at open homes, most likely fuelled by the low interest rates, the limited volume of properties available for sale and rising market confidence.
Corelogic data released on 3 February 2020 has confirmed that the median dwelling values in Brisbane rose again in January by a modest 0.5 per cent, but when we look at houses alone this growth was 0.7 per cent across January whereas units experienced negative growth of -0.6 per cent.
Of course, seasonal factors often result in reduced sales activity in the month of January, so we expect February will deliver a much better feel for the current Brisbane trends as activity returns to normal.
Looking ahead, interest rates are expected to see further reductions in 2020, which along with consistently strong population growth to South East Queensland, is likely to continue to support housing demand in Brisbane.
In terms of supply, according to the most recent quarterly ABS Data, published on 15 January 2020, dwelling approvals, commencements and completions are all collapsing across Queensland as a whole, despite rising population growth. Total dwelling commencements are down 27 per cent from the previous year. Additionally, listing volumes remain 6 per cent lower in Brisbane compared to this time last year, so this also puts limits on the available supply in the current market.
To summarise, supply is currently constrained and demand for property is huge right now in Brisbane.
If you are looking for sustained capital growth opportunities, according to Herron Todd White’s latest Month in Review the closer you buy to the Brisbane CBD, the more likely you will see capital gains. Adding to that, detached housing still attracts better growth premiums than attached housing. This is certainly supported by current Corelogic data. Commentary in the latest Herron Todd White report indicates that for a good investment location in Brisbane, you can travel further out but be nearby to public transport options, major services and employment centres.
With the First Home Buyers Deposit Scheme now in place, there is also going to be more competition in the market where properties are valued up to $475,000 in Brisbane (being the threshold that the Australian Government has applied for our city). This is something to keep in mind if you are looking to buy with a similar budget.
Gross yields are still very attractive in Brisbane, averaging 4.5 per cent. Corelogic has confirmed that the city has experienced rental price growth of 1.8 per cent over the last 12 months and SQM Research aligns with this showing an increase of 3.7 per cent in asking rents over the last 12 months across Brisbane as a whole.
With interest rates at record lows (the average fixed rate mortgage for an investor was 3.48 per cent at the end of December 2019) it is not hard to find positive cashflow properties in Greater Brisbane areas, but we urge investors to assess the potential for strong capital growth drivers in some of these locations if this is also part of an investors’ strategy.
As we always say … Brisbane is not one property market and there are certainly local pockets where growth has been much greater than the overall City average. The latest Domain House Price Report reported a number of suburbs that completely outperformed the Brisbane average – with many suburbs reporting strong annual growth well above 7 per cent - and a few suburbs with double digit growth.
We are certainly excited by what we are seeing on the ground every week. The Brisbane market seems to be hot and the competition is fierce. We are monitoring closely price movements in “real time” throughout certain pockets to ensure we keep up with the very latest trends in our great city. Perhaps is it finally Brisbane’s time to shine?
Melinda Jennison is the managing director of Streamline Property Buyers Brisbane.