After watching from the sidelines as Sydney and Melbourne topped the property game, will Brisbane finally have its time in the sun?
For years, the property market of Queensland capital has grown modestly as other major capital cities, particularly Sydney and Melbourne, saw spectacular rises in housing values in what was regarded as an unprecedented property boom—that is, until a few months ago, when tides have turned.
Sydney and Melbourne’s markets started to enter the softening phase, recording huge declines in dwelling prices over the past months. Meanwhile, Brisbane continues its slow and steady growth.
As other capital city markets are moving backward, experts believe that Brisbane is rising as one of today’s best-performing capital city markets on the mainland with a great potential for future growth.
The rise of Brisbane as a property investment hub is further proved by the improvement in consumer confidence. In the recent Property Investor Sentiment Survey by the Property Investment Professionals of Australia (PIPA), it was revealed that 44 per cent of more than 800 investors believe that the best investment prospects are in Brisbane—up from last year’s 43 per cent.
According to PIPA chairman Peter Koulizos: “Since 2007, Brisbane and Adelaide haven’t really experienced that upward swing, so sooner or later, Adelaide and Brisbane are going to take off."
Brisbane’s property market continues to display exceptional fundamentals for property investment, including affordability, lifestyle and economic and population growth, which is the reason why the capital city continues to experience growth consistently albeit at a slow pace.
“I’m not saying they’re going to have double-digit growth, but if you’re looking to park your money somewhere for the next five or 10 years, it wouldn’t be Sydney or Melbourne because they’ve already had their growth and it wouldn’t be Hobart, too, because it's already had its growth. Therefore, it’s Adelaide or Brisbane.”
Despite flood events and the end of the mining boom, Brisbane has seen a median price growth of almost 40 per cent within the past 10 years, according to Propertyology’s Simon Pressley.
Meanwhile, for the financial year 2017-2018, Brisbane saw a 2.8 per cent annual house price growth, and while this rate of growth is far from extraordinary, it has made the Queensland capital one of the best-performing capital cities today as Sydney and Melbourne's markets continued to soften.
Experts believe that this ‘slow and steady’ growth in Brisbane could be a better path to follow than hoping for a property boom, which could lead to affordability issues similar to what Sydney and Melbourne are seeing now.
Brisbane’s stable environment maintains the affordability of housing and the potential for income growth.
According to Mark Shearwood, an avid investor in Brisbane: “Brisbane's amazing. It's like a volcano. What happened to the Gold Coast, I think that's what's going to happen to Brisbane. It's just bubbling away.”
As lending constraints are implemented to alleviate the issues in most capital city markets, Queensland’s capital is unlikely to see a property boom but, unlike its declining neighbours, Brisbane will continue to see moderate increases of around one to three per cent, experts said.
“You've got to look at the logistics of it all and the economics of it all, right? When you study it, there's no other way—Brisbane has to explode. The government is doing mountains and mountains of things to improve that city, and they can go wider.”
Buyers and renters also continue to flock into the capital city as the ‘prime markets’ of Sydney and Melbourne become more unattainable due to sky-high prices.
Apart from enjoying the great weather in the capital city, people are also keen to chase jobs in the state capital. Infrastructure projects such as the Queens Wharf and the new airport runway are expected to create more jobs moving forward and ultimately provide long-term economic benefits across the city and its neighbouring regions.
Moreover, the rising rate of interstate migration will further the growth of population and increase the demand for housing.
Mr Koulizos said: “The affordability of Brisbane compared to Sydney and Melbourne has really come into sharp focus in the past year.”
“Not only are investors considering theState capital as an investment location, but a growing number are also choosing to migrate to take advantage of the significant value gap as well as Queensland’s enviable lifestyle and strengthening economy.”
To improve people’s experience in Brisbane's rental market and ultimately enhance the investability of the capital city's properties, the Queensland government announced the beginning of the ‘Open Doors to Rental Reform’ consultation program, which will allow renters, landlords and real estate agents to express their opinions on renting in the state.
Suggestions can also be posted on social media with the hashtag #RentinginQLD or directed to officials through consultation activities that will be held in selected markets and shopping centres. The consultation program will run until 30 November.
As the final effects of the mining downturn wear off and once Brisbane’s economy begins to pick up again, experts believe that investors are less exposed to risks nowadays.
Brisbane’s mild and consistent growth presents multiple wealth-creation opportunities for property investors, particularly the more affordable corridors where the best high cash flow options are located.
Fifteen kilometres south of Brisbane’s CBD, Coopers Plains offer houses that can be purchased for just $400,000, with a potential for positive cash flow at $3,600 per year, according to Mr Pressley. The suburbs of Cedar Vale, Russel Island, Blackstone and Gailes are also among the top areas for good cash flow positive opportunities.
Other affordable suburbs with decent-sized suburban blocks, abundant shopping and lifestyle facilities and easy access to public transport include Eaton Hills and Strathpine, with investment opportunities for less than $600,000.,
Ipswich City, meanwhile, offers opportunities through the development of large vacant lands as well as a strong population growth. In fact, the region is considered as one of the fastest-growing real estate markets in Australia due to active development activities accompanied by major spending on infrastructure and property investment.
Moreton Bay and Redcliffe Peninsula also boast affordability and transport links to the CBD and other major employment hubs, as well as high sales volumes and good potential for price growth brought by high levels of investment activity.
The Brisbane property market definitely has good fundamentals for property investment, including affordability, lifestyle and economic and population growth, making it one of the best locations for wealth-creation today. While the capital city’s performance had been lukewarm, investors could breathe easy knowing that its property market has been growing consistently, albeit at a slow pace.
Experts strongly advise investors to implement long-term strategies in order to maximise the wealth-creation opportunities in Brisbane’s property market.
According to Mr Pressley: “Despite the troubles, Brisbane investors who’ve waited are still well ahead. Best of all, the fundamentals look extraordinarily good for the next few years.”
Moreover, investors should dig deeper than just capital city-level research and ultimately avoid subscribing to ‘Sydney standards’, or looking for the same pattern experienced by Sydney in other markets. At the end of the day, each property market will move differently in their respective cycles.
Take time to understand ‘markets within markets’ as there will be locations that offer strong growth potential and there will be submarkets that could bring property portfolios down—even in the consistently growing property market of Brisbane.
Experts reminded investors that due diligence must be done on a suburb-level in order to identify the best location for property investment as well as the right strategies to implement.
Mr Shearwood advised his fellow investors: “Just keep your eye on the prize because it will come. If you've got 10 years of hard graft ahead of you and you can stay the course and you understand where you're going, irrespective of the hurdles or challenges put in front of you, you can move around them or jump over them.”
“If you do the right investments, it will come. It definitely will come. Short-term pain and sacrifice for long-term gain.”
To know more about the latest updates on Brisbane and other major property markets in Australia, check out Smart Property Investment’s monthly property market news roundup.
This information has been sourced from Domain, realestate.com.au and the Smart Property Investment website.