As the housing markets of Sydney and Melbourne continue to decline, the Brisbane property market shows signs of stability for the year ahead. How can investors capitalise on the Queensland capital this 2019?
Experts said that, compared to most capital cities, Brisbane offers reliable returns to property investors amid uncertainties in the market brought by the tightening of the credit environment as well as the possible regulatory changes that may come with the looming elections.
Herron Todd White’s Month In Review found that Brisbane’s property market will continue to see consistent, steady growth through the year will experience some growth in 2019.
“Brisbane in the coming 12 months will, generally speaking, see a stable market across most locations. Brisbane has been on the cusp of substantial price rises for about six years now,” the report noted.
The influx of infrastructure projects, which are expected to influence jobs growth and population growth, will stand as one of the major drivers of growth in the property market, according to the report.
“Some of these major projects will have national and international appeal – the Howard Smith Wharves project and the Queens Wharf complex in particular – which have a ﬂow on for boosting our tourism and services sector.”
Right Property Group’s Steve Waters said: “Brisbane has an abundance of universities, but also looking at what’s in the pipeline, there are significant things lined up there.”
“That’s where investors get it wrong. They look at the now, but they haven’t been to council or talked to the town planners to see what’s in the pipeline in terms of DA approvals and construction. That will have a direct effect on their rentability in two or three years’ time, whether it’s the universities, the train lines, the freeways or the community facilities.”
Moreover, the capital city’s affordability and high levels of interstate migration will continue to strengthen housing demand moving forward.
The improving consumer confidence in the market also points to a better future, according to Momentum Wealth’s Emma Everett.
Along with most preferred capital city to invest in, based on their recent survey., Brisbane emerged as the
“Whilst both markets offer strong levels of affordability compared to Sydney and Melbourne, they also hold promising opportunities for long-term growth, with Brisbane already experiencing overall price growth and areas of Perth performing strongly as the market enters its recovery,” Ms Everett said.
During the final week of February, Brisbane’s dwelling values declined by 0.2 per cent, following Perth and Sydney with 0.4 per cent and 0.3 per cent, respectively. Adelaide, on the other hand, saw no movement.
Despite the recent decline, Neil Bray, Valuer-General of Queensland, said that the impact on investment will be reduced to a soft landing; as the capital city, along with select areas in Queensland, shows ‘minor’ success and continued signs of strength.
“While approvals and construction have declined, the substantial amount of work remaining in the pipeline indicates dwelling investment is headed for a ‘soft landing’ compared with previous housing cycles,” the advice from Queensland Treasury read.
Since 2017, the land values in Brisbane rose by 6.8 per cent, with residential land rising between 5 to 15 per cent.
In the whole area, 126 suburbs saw property value rise by 15 per cent, with 16 rising by more than 15 per cent, while 37 suburbs saw values hold steady.
Among the inner city suburbs with the highest increases in median values are Auchenflower, Woolloongabba, and . Other well-performing suburbs include Carseldine, Boondall and Rocklea, as well as Sinnamon Park, and Kenmore.
Meanwhile, the Greater Brisbane region, particularly the Redland City Council and the Ipswich City Council, have seen general market conditions improve since 2016 and 2017, respectively.
The suburbs of Alexandra Hills, Logan Central, Woodridge, , Jimboomba, Ripley, South Ripley, and Camira saw improved demand and increases in property values, while , the Peninsula, and Dayboro saw slightly large land value increases. Multi-unit land values, on the other hand, saw improved demand in Caboolture, Redcliffe Peninsula and Bribie Island.
As listings fell in all but two capital cities – Hobart and Darwin – during the final week of February, vendor discounting was recorded between 4.9 per cent and 8.6 per cent for houses across most capital cities. For units, it was noted to be in between 6.1 per cent and 7.6 per cent, with Canberra as the low-end exception for houses and units, and Darwin as the high-end exception for houses and Perth as the high-end exception for units.
Discounting in Brisbane has been regarded by experts as mild, currently sitting at -5.3 per cent, increasing from -4.4 per cent the year prior. This has been the highest level of discounting for almost the last six years.
Houses remained more popular than units, with the average time for houses on market mostly declining across capital cities. Hobart houses and units had the fastest time on market, both at 37 days.
While Brisbane do offer opportunities for investors, experts still strongly advised them to conduct their due diligence into the property and around the area.
After all, the Brisbane property market is only on the early stages of recovery.
Ms Everett said: “In these early stages of recovery, it’s not uncommon for different areas of the market to experience price growth at different times, so investors will need to remain diligent in their research to ensure they are selecting an area that aligns with both their investment strategy and growth expectations.”
Further, avoid listening to ‘irresponsible’ media reports that blow up the current market conditions and make them sound like Australia is heading for Armageddon.
Aside from affecting their willingness to continue growing their portfolio, these headlines are also negatively impacting the market as a whole.
“This headline-driven reporting makes buyers nervous and unwilling to buy. The lack of properties selling means that not only the real estate industry is depressed but there’s a flow on effect to conveyancers, lawyers, landscapers, hardware stores, furniture stores and, of course, state government revenues,” according to Plant Barry Group’s Barry Plant.
“There’s also a general uneasiness that develops with all homeowners that the value of their asset is being eroded and so they curtail spending.”
Instead, the property expert encouraged investors to focus on their own research.
“Researching’s easy. There’s so much information out there these days. You can look up property sales, you can look up property values, you can do all sorts of things.”
Experts also advise the diversification of assets and the establishment of good cash flow and safety buffers. Amid fluctuation and uncertainties, these risk mitigation strategies could allow investors to remain active and ultimately thrive in the property market.
According to Mr Waters: “The very first thing I’d do is be liquid. It’s not just risk mitigation for you, but it’s your opportunity to execute opportunities, so to speak. Investors with the most cash will always do well.”
“I’d also be looking for diversification. So, if I’ve invested in Sydney during the last cycle, then I perhaps consider moving to Brisbane or potentially entertain the idea of investing in some areas of Perth,” Mr Waters highlighted.
For investors who want to continue buying, he suggested concentrating on larger blocks that can be split, staying close to the CBDs and avoiding unit markets, which could face oversupply soon.
Ultimately, investors are advised to focus on long-term strategies in order to be able to thrive through fluctuations in the property market.
“You need something that’s a fundamental, something that’s going to give you ample cash flow. Cash flow management is king because you can have all the cash flow coming in, but if your expenses aren’t in check, then you sustain a negative impact on your portfolio.”
Across Queensland, South East Queensland suburbs are expected to perform well, particularly theCoast, largely due to infrastructure projects, according to Rethink Investing’s Scott O’Neill.
“There’s the already completed $3 billion hospital, great universities, upgrades to the airport, growing incomes from construction jobs on public infrastructure to housing, a new Wet’n’Wild and increased populations across all demographics,” he said.
Brisbane’s middle-ring suburbs could also show its best performance in the next five years after it comes off a ‘terrible ten years’.
“Incomes have grown since then, rents have grown and that housing affordability will just give it resilience no matter how doom and gloom the media reports seem.”
While a little more expensive than other areas, the inner- and middle-ring suburbs of the Queensland capital, particularly around three kilometres of the CBD, such as Enoggera out to and Annerley through to Moorooka, could provide long-term investment opportunities.
“We aren’t recommending anyone rush back into this type of investor accommodation, but the future is looking less dire than it did a couple of years back,” the Herron Todd White’s Month In Review report said.
“2019 will be a year to watch in Brisbane. If we can accentuate the positive and eliminate the negatives, then property owners should do fine by annum’s end.”