Following the years-long boom of Sydney and Melbourne, a lot of investors are anticipating Brisbane to follow suit, but Propertyology’s Simon Pressley believes that Queensland's capital city lacks one important ingredient to the recipe for property success.
Mr Pressley shared: “When Sydney was going through its boom in the early stages, around 2014, our phones were ringing red-hot with people saying, ‘Help us invest in Brisbane, it's going to boom.’”
“But why is it going to boom? They say, ‘Oh, because Sydney has and Melbourne has, so Brisbane must next,’ ” he added.
However, the buyer’s agent points out the fact that the capital city is missing one of the most important drivers of growth in property investment—job growth.
He said: “That's what Sydney has and still does, that's what Melbourne has, that's what Hobart has. That's always been the primary driver of all markets.”
While it is possible that the benefits of a growth driver ‘flow’ from one market to another, at the end of the day, property market booms aren’t common colds—they don’t just ‘catch’ each other’s growth and benefit from them in the same ways.
Job growth did improve in Brisbane in the latter half of 2017, but it’s still primarily due to government-related jobs.
Small businesses, while thriving, still fail to give agents the confidence to invest in the city.
Moreover, the end of the mining boom also impacted the capital city’s economy.
When the coal prices died, while property prices crashed in the mining towns, Brisbane’s commercial property market suffered a terrible loss as well.
Up to now, commercial office vacancy rates in the central business district remains at 18 per cent.
“The economy is improving but it's [a] mild improvement,” Mr Pressley highlighted.
Once jobs start to grow in Brisbane, along with a rollout of infrastructure projects to increase local confidence, the buyer’s agent believes that investors can start to see impressive growth in the market.
After all, the capital city’s housing affordability continues to attract interstate migration—an early sign of a potential boom.
According to him: “It would be great if Brisbane can get their act together with the economy. There’s nothing wrong with their weather, nothing wrong with affordable housing.”
“I'd love to see Brisbane boom but it hasn't yet,” he added.
While you’re waiting for Brisbane’s economy to recover, Mr Pressley recommended looking into nearby suburbs for investment opportunities.
Logan Shire, Ipswich Moreton Bay and the Redlands benefit from existing infrastructure as well as the upcoming establishment of a new university, which is expected to increase population and jobs.
However, similar to investing in any other markets, the buyer’s agent strongly encouraged doing due diligence before jumping into an investment.
He said: “They've all got their merits but, I guess, it's no different to Sydney and Melbourne.
“You need to pick the right street and you need to know not just what supplies there are in the immediate vicinity now, but what can’t you see when you're driving around—zoning changes.
“You might be driving down a street and think, ‘This is, predominantly, houses with a few six-pack apartments’ but there might actually be approvals in place for a couple of 10- or 20-story apartment blocks,” Mr Pressley added.
Markets perform differently for a variety of reasons, he highlighted, so it’s the responsibility of investors to do due diligence and study the factors that actually drive the markets they’re looking to invest in.
Tune in to Simon Pressley’s property market update on The Smart Property Investment Show to know more about the current state of markets across Australia.