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Brisbane’s property market value over the year

Brisbane’s property market

Brisbane’s property market values remained resilient over the year, especially given the economic impact of COVID-19.

Price growth of Brisbane residential real estate had been more subdued in the lead up to the COVID-19 outbreak compared to Sydney and Melbourne and, in turn, Brisbane only experienced a mild downturn and property values have now been rising again over the last few months.

Brisbane’s property market

With the success in containing COVID-19 and its associated restrictions and the RBA assuring us that the recession is over, property market confidence has lifted and Queensland has recorded an impressive recovery in house prices.

First-home buyers are taking advantage of incentives and established home buyers with secure incomes are being lured by historically low-interest rates

At the same time investors, not only from Queensland but from interstate, are finding the price points and rental returns of Brisbane property very favorable.

Domain’s Buyer Demand Indicator shows houses remain a firm favorite of prospective home hunters, with demand rising post-lockdown and at levels significantly higher than this time last year.

However, unit demand has been sliding since late May although remains slightly higher than last year, with investment stock (not investment grade stock but those poorly built and designed high-rise apartments) likely to be impacted most.

Westpac Bank recently updated its property forecasts, with Brisbane prices tipped to surge 20 percent between 2022 and 2023, meaning Brisbane is likely to be one of the best performing property markets over the next few years.

Of course, while some locations in Brisbane have strong growth potential, and the right properties in these locations will make great long term investments, certain submarkets should be avoided like the plague.

To help you make an informed decision, I’m going to examine what’s going on in the Sunshine State in detail in this article.

But be warned…it’s a little longer than normal, so if you’re looking for a particular element of the Brisbane property market, use these links to skip down the page.

There are multiple markets in the diverse sprawling city of Brisbane; divided by geographic location, price point and property type.

And just to make things clear…I’m talking about the property market in Brisbane – not the Queensland property market. That’s a very different animal!

If you’ve been following my property investment strategy, you’ll know I only invest in capital cities and that’s why I avoid the Sunshine Coast, the Gold Coast, and Queensland’s regional markets which have very different (and fewer) growth drivers than Brisbane and are therefore more volatile.

So…is it the right time to get into the Brisbane property market?

 

While I was always positive that our property markets were going to pick up, recently three major factors have underpinned the property markets and will contribute to a perfect storm of positive growth drivers that will have property markets performing strongly in 2021 and 2022.

The first was the announcement of sweeping changes to remove overly restrictive lending rules.

This will give more people access to easier credit, enabling them to borrow more and get into the market.

The other big gamechanger was the budget. It’s been calibrated to create jobs and promote consumer confidence, which will encourage buying and investing.

Then more recently the RBA lowered interest rates and “promised” not to raise rates for at least 3 years, saying it will do everything it can to support jobs, businesses and boost our economic recovery.

Sure there are economic headwinds that will affect us and there will be a few challenges in the first quarter of 2021 as a number of small businesses close down.

But there will be a combination of factors leading to a period of strong property price growth in the second half of 2021 and into 2022 with a confluence of the following:-

  • Federal Government spending, initiatives, and infrastructure projects
  • State Government spending and infrastructure initiatives
  • Historically low-interest rates making borrowing as cheap as it has ever been and therefore holding investments or taking out a home loan very affordable
  • The security that interest rates will remain low for a number of years will encourage people to borrow
  • Easing of credit approval criteria could allow many people to borrow considerably more than they could before.
  • A return of international demand for Australian property
  • A return of immigration and students to Australia is also possible

But, as I have explained, there are multiple housing markets within Brisbane, based on price point, geography and type of property, and as always, you can’t just buy any property and count on the general Brisbane property market to do the heavy lifting over the next few years, so careful property selection will be critical.

Fast facts about the Brisbane property market

1. Brisbane Property Market Prices

Brisbane property looked like it will finally have its turn in the sun.

While the overall figures for the Brisbane housing market remained flat over the last few years the markets are very fragmented.

 

CoreLogic report that since bottoming out in June 2019, Brisbane’s dwelling values are up 3.5% over the last year and are now at new highs.

But digging deeper into the stats some properties have far outperformed others and freestanding Brisbane houses with 5-7 km of the CBD or in good school catchment zones have grown in value strongly.

I know that many of the properties purchased for clients of Metropole’s Brisbane office showed double digit capital growth over the past 12 months –  that’s how averages work isn’t it?

And while some properties overperform, while others underperform.

The worst performing segments of the market are:

  • apartments in high rise towers and new and off the plan apartment sales.
  • properties in the blue-collar areas and new housing estates where young families are likely to have overextended themselves financially and with many people will be out of work for a while.
It’s really a tale of 2 cities.
While many Queenslanders have been affected by the coronavirus induced recession, other households and property investors whose incomes remain stable and secure are taking advantage of historically low interest rates and upgrading their homes or buying investment properties.

The following chart from Dr. Andrew Wilson shows that currently the number of property transaction in Brisbane are at pre Covid19 levels.

Brisbane’s property market

Brisbane’s property market

Brisbane’s property market

The following chart from Dr. Andrew Wilson shows that currently the number of property transaction in Brisbane are at pre Covid19 levels.

Brisbane market place

2. Brisbane’s Property Market Trends

Now don’t get me wrong. Not all Brisbane property values will rebound strongly moving.

Properties located in the inner ring suburbs, particularly in gentrifying locations, will outperform cheaper properties in the outer suburbs.

The reason being, Covid19 has adversely affected low income earners to a greater extent than middle and high income earners who are likely to recover their income back to pre-pandemic levels more quickly, while many have not been hit at all.

High-rise apartment towers in and near the Brisbane CBD which were already suffering from the adverse publicity of structural problems prior to Covid19, will now become the slums of the future as they are shunned by home owners and investors.

And like after every downturn, there will be a flight to quality properties and an increased emphasis on liveability.

As their priorities change, some buyers will be willing to pay a little more for properties with “pandemic appeal” and a little more space and security, but it won’t be just the property itself that will need to meet these newly evolved needs – a “liveable” location will play a big part too.

To many, liveability will mean a combination of:

  1. Proximity – to things like parks, shops, amenities and good schools
  2. Mobility – access to good public transport (even though this may be less important moving forward) or a good road system
  3. Access to jobs

The bottom line is that for those with a secure job and who have their finances under control, now could be the best opportunity in a decade to set themselves up for the opportunities that will present themselves as our property market head into a perfect storm with a confluence of growth drives in 2021-22.

Currently the number of property sales in Brisbane is picking up from the low levels of a couple of months ago with buyers and sellers back in the market and currently at low levels, asking prices are gently rising:-

Brisbane market place

Source: SQM Research

However, a factor that will dampen property price growth moving forward is that thanks to COVID-19 the banks are now becoming more cautious.

Some banks are more reluctant to lend to new or off the plan properties in selected Brisbane postcodes by lowering the maximum loan to value ratio.

These postcodes include:Chermside, Hamilton, Milton, Toowong, Woolloongabba and Biggera Waters.

3. Brisbane’s  Rental Yields

Brisbane has one of the country’s most stable rental markets up until March 2020.

However the call for foreign residents and tourists to return home amid the rise of desperate renters facing job losses had sparked the last-minute surge in rental vacancies with a drop in asking rentals but this has mainly been in the inner city apartment market.

Brisbane house rentals have held steady.

Brisbane rents

SourceSQM Research

Traditionally in Brisbane, vacancy rates have been tight; hovering well below the level of 2.5% vacancies, which traditionally represents a balanced rental market.

But as you can see from the graph below, vacancies in Brisbane rose over the last few years in response to the significant oversupply of apartments, however vacancy rates have since fallen as this oversupply was slowly soaked up.

However with the recent lockdown, social distancing, travel restrictions, the shutdown of immigration and the return of many properties that were previously let as Airbnb to the rental market will lead to higher vacancy rates and rental falls of as much as 10% in some locations.

At Metropole Property Management our vacancy rate is less than half this rate, in part because our clients have chosen investment grade properties, but we’d like to think it also has a bit to do with our proactive property management policies.

 

Brisbane vacancies

 

According to the SQM, Brisbane’s gross rental yield for houses is currently around 4.0 per cent and for units is around 5.2 per cent

Brisbane Yields

 

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4. Brisbane Capital Growth 

Brisbane Property

Before the onset of COVID-19, one of the underlying demand fundamentals of the Brisbane housing market was its affordability and lifestyle, which drew interstate migration from other parts of Australia, particularly New South Wales.

In the two years to September 2019, ABS migration data suggests that Queensland receive the highest number of interstate migrants of the states and territories.

49.4% of this interstate migration to Queensland Tang from New South Wales.

The breakdown of interstate arrivals from different states to Queensland is present in the chart below.

Interstate migration Queensland

While Brisbane property prices are considerably more affordable than the other 2 east coast capital cities, earlier this year Corelogic forecasts that one in 10 houses sold in Brisbane will fetch more than $1 million within 2 years.

Sure things have slowed down in the short term, but the Brisbane property market is now at a new high and will continue to record positive growth due to the many underlying strong market drivers.

The affordability factor, with Brisbane’s median house price now far lower than Sydney and Melbourne, as well as higher rental returns, is likely to drive more interstate investment into the city.

As mentioned, local affordability and the lifestyle advantages has resulted in strong interstate migration. At the same time 12.7 percent of our overseas migrants have been settling in Queensland and interest from foreign investors is rising.

Of course, international migration will be put on hold for a short time, but once we are through the current pandemic, Brisbane will remain an attractive location for overseas foreign migrants.

Similarly sunny Queensland with its wide open spaces will be even more attractive than ever for interstate migration.

Houses in Brisbane’s inner and middle ring suburbs offer the best prospects of long term capital growth.

 

Brisbane House Price Growth

 

Brisbane’s top performing regions 2019

 

A14

A15

Vulnerable areas in Brisbane

Like most housing markets in Australia, dwelling markets across Queensland now face new challenges in the wake of the coronavirus fallout.

The Brisbane market is the second highest exposure of the capital cities (after Hobart) to accommodation and food, and answer recreation servic.es

 

Workforce Queensland

In particular, it looks as if the Sunshine Coast and Gold Coast will see many job losses.

These are the dwelling markets that have some of the strongest value growth across Queensland in the last year, but now, these markets may face some of the biggest employment challenges.

What’s special about Brisbane?

5. Brisbane’s demographics

According to the Australian Bureau of Statistics 2016 Census the population of Greater Brisbane which encompasses the local government areas of Brisbane, Logan, Ipswich, Redcliffe and Moreton Bay is 2,270,000.

This is less than half the population of its southern east coast cousins – Sydney and Melbourne.

Brisbane Census

 

According to the 2015 Intergenerational Report the population of Australia is expected to almost double by 2055, with Queensland also becoming home to more than seven million people over the next 40 years.

Given its sub-tropical climate, the region is well known for its laidback lifestyle and enviable weather.

Greater Brisbane also has far more affordable property than the southern cities of Melbourne and Sydney.

6. Brisbane’s layout

Brisbane,  is a sprawling city with outlying suburbs up to one hour drive from the city centre.

Sprawling along the Moreton Bay floodplain, Brisbane stretches from Caboolture in the north, to Beenleigh in the south, and as far as Ipswich in the west.

Winding around the Brisbane River the city is rather hilly, with prominent rises including Mt Coot-tha, Enoggera Hill, Mount Gravatt, Toohey Mountain and Highgate Hill to name a few.

The Central Business District  itself is fairly well laid out but it can be tricky to navigate through with all the one way.

If you ever get confused a golden rule for the CBD is that the streets with female names (Margaret, Ann, Queen etc.) run parallel to each other and the streets with male names (Edward, George etc.) also run parallel to each other.

The CBD is still in the original settlement location in a curve of the river about 23 kilometres upstream from Moreton Bay.

The river acts as a natural divide with the city colloquially broken into two sections, namely “north of the river” and “south of the river”.

The inner-ring of suburbs of Brisbane are classed as between zero and five kilometres from the CBD, the middle-ring from five kilometres to about 12 kilometres and the outer-ring from the point to the start of the borders of its Greater Brisbane’s regional councils.

In spite of the hilly areas of Brisbane, much of the city exists on the low-lying flood plains, with several suburban creeks throughout the suburbs joining the Brisbane River.

These low-lying areas on the water’s edge increase the risk of flooding.

7. Brisbane’s infrastructure

Economic growth in Queensland is projected to accelerate from 2.5% last financial year to 3% by Financial Year 2019, supported by the biggest infrastructure spend since the 2011 flood recovery

This was announced in the FY19 Budget in June 2018.

There are many multi-million dollar projects happening in and around Brisbane at the moment, that are starting to create jobs and more importantly get the economy rolling again.

 

One of the biggest would have to be the addition of a second runway to the Brisbane Airport and you would hope so too, at a total cost of around $1.3billion.

The project is due for completion in 2020 and after 8 years in the making, will become Australia’s largest aviation construction project.

It has already provided hundreds of construction jobs and by 2035, it is expected to generate up to 8,000 new jobs and generate an additional $5billion dollars to the Brisbane Economy.

To put that into perspective that is almost half the economic output of a Regional town like Toowoomba or more than a third of the output of the Sunshine Coast economy.

The huge project will increase Aircraft capacity to around a staggering 110,000 movements per hour and Brisbane is set to become the gateway to the rest of the country, in particular Asia.

Capitalising on opportunities from the Asian Century, there are many major tourism projects with a combined value of $30 billion scattered up and down Queensland’s coastline.

New resorts – and upgrades of existing resorts – are slated for Brisbane, Ipswich, the Gold and Sunshine coasts, Rockhampton, Mackay and Cairns.

While new infrastructure is an important element for investors to consider, it doesn’t necessarily lead to property price increases and sometimes can be detrimental to an area through increased traffic, noise or pollution.

8. Brisbane’s economy

Queensland property market data

Brisbane is Queensland’s economic engine room – a growth city with a strong history of economic performance and significant infrastructure investment.

All the economic key pointers are heading in the right direction.

Brisbane’s economy is being underpinned by major projects like Queen’s Wharf, HS Wharf, TradeCoast, Cross River Rail, the second airport runway and the Adani Coal Mine, but jobs growth from these won’t really kick off for a few more years.

Despite global uncertainty, the economy is predicted to be worth more than $217 billion by 2031, according to the Brisbane City Council Economic Development Plan 2012-2031.

 

Brisbane Economic Profile

 

Source: Charter Keck Cramer Valuers

9. Brisbane’s Population Growth

Brisbane’s 2019 population is now estimated at 2,372,335.

In 1950, the population of Brisbane was 441,718.

Brisbane has grown by 159,446 since 2015, which represents a 1.75% annual change.

These population estimates and projections come from the latest revision of the UN World Urbanization Prospects.

And the population of Greater Brisbane is expected to continue to experience solid growth over the coming 10 years according to a report by Place Advisory.

The Australian Bureau of Statistics has predicted strong population growth at an average of 62,410 people in Brisbane per year over this period.

Underpinned by continued overseas and interstate migration, metropolitan Brisbane requires approximately 23,000 additional dwellings each year to accommodate its growth.

Greater Brisbane Population Projections

Population Projections Greater Brisbane

Whilst, family households are expected to see the largest increase over the next 10 years, the Australian Bureau of statistics projects that lone person households will have the highest growth rate leading into 2028, averaging a 2.4% increase per annum.

This is followed by family households which have a projected average growth rate of 1.8% per annum over the same time frame.

Group households are set to see the smallest growth rate at an average of 1.4% per year.

Greater Brisbane Household Projections

House Hold Projections Greater Brisbane

10. Brisbane’s culture

Given its sub-tropical climate, Brisbane is well-known for its outdoor lifestyle, especially the plethora of dining options along the Brisbane River in residential and restaurant precincts such as Teneriffe, Bulimba, New Farm and West End.

Brisbane is no longer a “big country town” in fact it’s a veritable hotbed of cultural and creative offerings, festivals and events, according to experts.

Exclusive blockbuster exhibitions and inspiring theatre productions sit alongside independent and emerging local performances, outdoor cinema, street art and intimate gallery and performance spaces.

Lovers of comedy, musicals, live theatre and dance head to the Brisbane Powerhouse and QPAC.

The Queensland Museum and QAGOMA offer free entry to permanent exhibitions.

Fortitude Valley and West End are go-to destinations for local live music gigs and DJs, while international acts visit the Brisbane Entertainment Centre or Suncorp Stadium.

And while Brisbane is Australia’s third largest city, tenants don’t necessarily want the same features as renters in Sydney and Melbourne.

What Brisbane areas are worth investing in?

So where should an investor start looking?

Like everywhere else in Australia, the Brisbane property market will be driven by demographics – where people want to live, how they want to live and how much they can afford.

That’s why I only invest in areas where the locals’ income is growing faster than the national averages.

Think about it… in these locations locals will have higher disposable incomes and be able to and should be prepared to pay a premium to live in these locations.

Many of these locations in Brisbane are the inner and middle ring suburbs which are gentrifying as these wealthier cohorts move in.

There are great investment opportunities in these suburbs in houses and townhouses.

You know how they say “the best indicator of future performance is past performance.”

Now that’s not always correct, but obviously the longer a suburb has outperformed the more likely it will continue to at least perform well and at best remain a star performer.

In Aussie’s 25 year property trend report CoreLogic has identified the best performing suburbs for price growth over the past twenty five years, based on change in median prices between 1993 and 2018.

While the Brisbane property market has been generally subdued compared to the other east coast capitals,  of course there is not one Brisbane property market and as you can see from the table below, these top 20 Brisbane suburbs all grew at an average of  more than 7% per annum which meant property values more than doubled every 10 years – if you bought in the right suburb – and then of course you had to own the right property in that suburb.

This forms part of the research data we use at Metropole to help our clients find investment grade properties, or A grade homes for owner occupation.

If you’d like to get the independent, award-winning team at Metropole on your side to help you through the maze of mixed messages about the Brisbane property market, please click here and leave us your details or call us on 1300 20 30 30

Overall the various suburbs in Queensland show a dramatic range in performance, highlighting both the diversity in housing stock around the State and no doubt that the next twenty-five years will show an equally diverse result

Consider school zones

There’s no doubt that proximity to popular education catchments influences property prices in Brisbane.

This is true of both primary and secondary school catchment zones, which have in general outperformed the market and are likely to continue to do so.

Education is a long-term consideration and, whether you are planning a family, have children already enrolled in school, or are an investor looking to attract long term, quality tenants, it may be beneficial to consider school catchment zones when you are determining suburbs of interest.

Here are Brisbane’s Best Performing Suburbs Over the Last 20 Years

Suburb Growth

These staggering amount of capital growth may surprise you, especially when you consider all the headwinds, Brisbane has faced over that time frame.

From economic events like the stock market crash in the early 2000’s to the Global Financial Crash to round out the previous decade and a mining downturn also didn’t help.

While most states went on to recover, Queensland faced a range of natural disasters from floods to cyclones that also took its toll on our economy.

So, despite all of that, these are very impressive figures.

While I am not suggesting the same amount of growth will occur in the next 20 years, I would certainly like to evaluate these suburbs and understand why they stood out.

What do these Suburbs Have in Common?

Here are the top 4:-

  1. 80% of these Suburbs are located within 10km of the Brisbane CBD.
  2. 80% of these suburbs have a train line
  3. 80% of these suburbs have a highly desirable school catchment
  4. All of these suburbs have incomes well above the Queensland average

For those that know these suburbs more than half of them have all 4 of these key drivers – so why fight the big trends when looking for your next investment property?

Some advice for new Brisbane investors?

11. Look for Brisbane’s best properties in the inner- and middle-ring suburbs.

Research shows that those suburbs close to the city centre generally perform better than all others over the long-term.

Our research at Metropole shows that (in general) properties closer to the CBD and closer to water increased in value faster than those further from the CBD and further from water.

And this general trend has again been confirmed by a paper by the Australian Housing and Urban Research Institute, which found that both in percentage terms and in absolute terms over the long haul suburbs located reasonably close to the CBD, where demand is high, close to employment and where the most people want to live and where there’s no land available for release, outperformed the outer suburbs.

One of the significant changes to occur in Australian cities over the past 50 years, and which has pushed up inner- and middle-ring suburb property values, is gentrification.

Interestingly this wasn’t caused by deliberate planning policy, but resulted from a set of demographic changes that have occurred in most major capital cities around the world.

The exodus of industry, migrants and many workers made way for gentrification of our inner suburbs where initially house prices and rents were cheaper than in the suburbs.

Later, our changing demographics with declining household size, in part because we were getting married later and having fewer children, meant that small inner suburban dwellings or apartments provided ideal accommodation for the expanding cohort of professionals who worked in or close to the CBD.

Gentrifiers were initially drawn to these inner suburbs by the diversity of jobs, educational opportunities and lifestyle and this trend continues today as more and more Australians are swapping their back yard for.

You may also want to watch this video: 5 Important Things Interstate Investors Need To Know Before Investing In Brisbane.

12. 4 Suburbs that MUST be on your radar

With leading Economists tipping Brisbane to lead the nation for capital growth over the next few years, I suggest you do your research before jumping on in!

BIS Schrapnel has predicted 13% growth for Brisbane out until 2021 and a recent report by QBE Insurance has predicted 11%.

Whatever the outcome, it is clear that Brisbane will continue to tick over with steady growth, while the rest of the nation takes a breather.

While Brisbane houses have only averaged around 25% growth over the last 5 years (or 5% per annum), these suburbs have outperformed and will continue to do so;

The Entry Level Suburbs

Budgets starting $530,000 – $600,000

Yes, my Sydney and Melbourne friends, it is possible to buy a house within that budget!

We have been buying in Keperra and Chermside West now for a number of years and for a number of reasons.

These suburbs sit around 9-10km from Brisbane and are the furthest out we recommend buying.

Let’s take a look at some of the data*;

Keperra

A1

The appealing thing about Keperra for us gets down to the Demographics.

Firstly, nearly two thirds of people own or are paying off a mortgage, a high owner occupier percentage.

Weekly Family Income has continually hovered above the Queensland average but in recent years, it has started to move even further ahead.

The most common Occupation in this location is Health Care and Social and according to the Queensland Government, this is going to be the fastest growing sector in Brisbane over the next few years and with our ageing population there will always be work.

These higher incomes and job certainty, mean that people will have more to spend on their home and be much more comfortable in doing so.

Adding to that, Keperra is also a train station suburb and according to Matusik research, suburbs close to rail have grown 40% more in value over the last decade in Brisbane.

In the last 5 years, while Brisbane has averaged around 25%, Keperra has almost 30% in the same time.

The future is bright and if you know where to find the superior pockets, you will be handsomely rewarded.

Chermside West

A2

Chermside West has very similar Demographics.

Income and Occupation is very similar and owner occupier percentage is almost 80%!.

We are seeing this suburb really gentrifying as social housing and retirees move out, they are being replaced by younger professionals who are targeting the nearby Craigslea State School catchment.

The suburb also boasts two hospitals that draw health care professionals to the area and it benefits from the development of neighbour Chermside into a type of Satellite City.

While many investors are attracted to Chermside, we would prefer Chermside West, with its favourable Demographics, higher owner occupier percentage and superior school zone.

You also get all the benefits of all the Chermside upgrading without having high rise and business on your door step.

The numbers tell the story here also with a rise of 36% over the last 5 years, well above the Brisbane average.

Other Entry level suburbs to keep an eye on;

  • Stafford Heights
  • Mitchelton
  • Everton Park

Middle Ring

Budgets starting from $650,000+

Starting to get closer in now and there are a number of good suburbs that sit around 6 or 7km to the Brisbane CBD.

Our pick currently is Cannon Hill.

Here is some of the research;

Cannon Hill

A3

Weekly Incomes in Cannon Hill have soared dramatically over the last few decades.

From almost being level with the Queensland average back in 1991, the last decade has seen a dramatic increase in wages and our expectation is that this will continue.

Again, it has a greater level of owner occupiers with around 70% either paying off a mortgage or owning their property outright.

It also has a lot of the tick boxes a family is looking for with access to good schools, green space, a bus and train line and easy access to our bugger employment hubs.

There is also a big trend to low maintenance living and with many bigger blocks having been subdivided over the years, land is now at a premium.

We have chosen Cannon Hill for it’s access to our ever expanding CBD, but also is the closest southern suburb to benefit from the Brisbane Airport precinct expansion.

The suburb has also seen around 30% growth over the last 5 years on average.

Other middle ring suburbs to keep an eye on;

  • Holland Park
  • Tarragindi
  • Toowong
  • Kedron

The bullet proof 5km ring

Budgets starting from $800,000+

Suburbs within the 5km ring are starting to resemble all the traits and pricing of some of our southern capitals, but one suburb that still offers value is Ashgrove.

Ashgrove is around 4km from the Brisbane CBD and has an excellent reputation for being a popular family suburb.

Here is some of the data;

Ashgrove

A4

The Demographics and Incomes here are increasingly very strong, with many in the professional and services-based industries and incomes heading toward twice the Queensland average.

The suburbs average age is 40 – 59, so families generally come first in this suburb, there is no surprise to see some of Brisbane’s best and most highly sought-after schools scattered throughout the streets.

It has a very leafy, green feel with walking paths and tracks and plenty of green space and combined with a number of larger character homes that have been restored and renovated it has found a great balance for an inner-city location.

Adding to that the easy access to shops and lifestyle precincts with high walkability it will remain in high demand moving forward and has already seen more than 36% growth over the past 5 years.

A5

Other inner ring suburbs to keep an eye on;

  • Auchenflower
  • Bardon
  • Wilston

With Brisbane tipped to lead the nation for capital growth over the shorter term, it will see interest rise in the Brisbane market.

While there will be opportunities available for almost every budget, it is important to understand the intricacies of each suburb.

Even within these locations I have mentioned, I would be reluctant to buy in some streets and pockets within these suburbs.

It takes on the ground knowledge and some content to understand the less desirable areas, the flood locations and undulating areas.

On the flip side, if you get the location right, you will be rewarded with above average capital growth and be able to set yourself up for the next stage of the property cycle, while others tread water.

* Sources Domain / SQM Research

13. Be mindful of  the Brisbane apartment market oversupply

Apartment living in Brisbane came late to the party compared to Sydney and Melbourne and, in general, houses make better long-term investments than apartments in Brisbane.

While many apartment towers have been built in the Brisbane CBD and surrounding suburbs, the recent building boom created an oversupply which is only now being slowly taken up.

However, moving forward after coronavirus, and with fewer international students and tourists in the next little while, I can see high rise apartment tower living falling out of favour.

People are going to be more wary and not want to share lifts and stairwells and press the same elevator buttons that others are.

 

Screen Shot 2020 08 27 At 6.58.49 PmScreen Shot 2020 08 27 At 6.58.56 Pm

In 2019, 5,000 apartments were completed in Brisbane, a decrease from the 5,600 apartments completed in 2018.

As you can see from the following chart apartment completion is across metropolitan Brisbane peaked over 2016 and 2017 when approximately 11,000 apartments were built each year.

With a few apartment complexes in the pipeline, oversupply will slowly be absorbed.

 

Apartment completions Brisbane

As mentioned, with fewer people wanting to live in high-rise apartment towers in Brisbane’s CBD and inner ring, there is little prospect of capital growth or rental growth in Brisbane’s apartment market in the near future.

I can see the situation where some off the plan purchasers will have to wait up to a decade for capital and rental growth.

Here’s a big mistake made by interstate property investors buying into Brisbane

Currently the Brisbane property market is being infiltrated by interstate investors ‘buying blind’.

With Sydney and Melbourne property prices having risen strongly over the last few years and now that these markets have slowed down from it’s frenetic pace, these high prices plus tighter banking regulations limiting investor’s budgets has caused many southerners to follow the sun north and look for property investment opportunities in Queensland but many are making a big mistake.

According to an article in Domain Sydney investors are increasingly buying properties in Brisbane solely on photographs and skipping inspections.

And they’re buying the wrong properties in the wrong location based on price.

Agents quoted in Domain say these southern investors are buying up in Brisbane suburbs considered “unfavourable” by locals and boosting house prices

One agent was quoted as saying:

“…blind-buying Sydney investors had flooded into the Logan market.

“Out of every 10 sales, five will be investors, and two will not have viewed the home, and that is a modest estimate.

“Often it seems as the investors have no idea about the area’s reputation.”

Domain quoted another agent as saying:

“We are seeing about 70 per cent of Sydney investors buying without seeing the homes,”

The lesson – don’t buy sight unseen:

It’s incredible what you can achieve, and the unsightly features you can avoid showcasing, when you’re using a good camera and exploit the right camera angles.

I’ve heard horror stories of people who have bought sight unseen thinking their investment property had an incredible view (it did – but only from the toilet) or who didn’t realise huge powerlines dominated the streetscape, because they relied on agent photos only.

The moral of the story is don’t risk purchasing site unseen unless you have a trusted representative review the property on your behalf.

How do I choose a strong investment property in Brisbane?

14. Buy a property for below its intrinsic value

I’m a big believer in buying property for below its intrinsic value – that’s why I avoid new and off the plan properties, which generally attract a premium price tag.

Remember, though, that you’re not looking for a ”cheap” property (there will always be cheap properties around in secondary locations).

You’re looking for the right property at a good price.

Properties to consider may be ones that are a little ugly or untidy but have good “bones” and are in good or superior locations.

Some of Brisbane’s middle-ring suburbs may be worthwhile considering given they often have solid homes on land sizes ranging from 405 to 600 square metres.

15. Buy a property that outperforms the averages

Look for an area that has a long, proven history of strong capital growth and is one that is likely to continue to outperform the averages.

This is largely because of the demographics in the area.

These suburbs tend to be those where a large number of owner occupiers desire to live in the area, because of lifestyle choices of offer.

I look for suburbs where wages (and therefore disposable income) is increasing above average.

This translates to being an area where locals are able to and prepared to pay a premium price to live there, putting a financial floor under your investment property.

This is also considered to be gentrification.

So what we’re seeing is high-income people moving into particular locations, which perhaps used to be considered blue-collar, and spending their money there in new cafes and on renovating their homes.

In Brisbane, for example, there are a number of inner-city suburbs where there is occurring such as Annerley and Woolloongabba on the south side.

16. Buy a property with a “twist”

An investment must have something unique, or special, or different or scarce – some ‘X factor’ that makes it stand out from its neighbours – in order to land on my shortlist.

So when your looking at the Brisbane property market, consider properties that are “special” because of their design, e.g. perhaps Queenslanders or art deco apartments or properties in desirable locations.

Although you must keep in mind that sometimes these unique properties are more expensive to buy and to maintain, but history shows us they usually have stronger capital growth

Remember that more demand than supply always means higher prices.because of that scarcity factor.

17. Buy a property where you can manufacture capital growth

An ideal investment is one in which you can manufacture capital growth through refurbishment, renovations or redevelopment.

 

For example, there are tens of thousands of properties out there that could all have their values increased through simple renovations.

While I don’t believe that investors should subscribe to the “buy, renovate, sell” philosophy, because the opportunity to profit is not great, what works really well, if done correctly, is a buy renovate and hold your investment property.

Here you buy a property with renovation potential, renovate and then keep it as a long-term investment having added value.

This added value will give you improved rentability – your property will be more attractive to a wide range of tenants – as well as achieving a higher rent and you will have “manufactured” some equity.

So what does all this mean?

To me, the picture is clear.

Brisbane’s property market is ripe for investment – its economy is improving, population is growing, infrastructure is being added and property remains affordable.

Your biggest challenge is to find the right property to buy, but that’s what the Brisbane team at Metropole specialise in.

Why not click here now and have a chat with us and discuss your options.

How can I stay on top of current information?

18. Get news, updates and advice by email

Are you interested in keeping up to date with the latest Brisbane property market news?

There is so much information available about various Housing Market Trends, strategies and market information that it can be overwhelming knowing where (or how) to get started.

Subscribe to Michael Yardney’s Property Update and get a daily dose of insightful commentary in your inbox each morning.

Join here; this is free and you’ll see we’ve been voted the world’s #1 property blog for the last 4 years in a row.

19. Take advantage of investment advice

 

If you’re wondering what will happen to property in 2020–2021 you are not alone.

You can trust the team at Metropole to provide you with directionguidance and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.

 

The post “What’s ahead for Brisbane’s property market?” by Michael Yardney appeared first on the propertyupdate.com.au Blog

Brisbane

Mirvac Sells Golden Triangle Tower for $87m

Golden Triangle Tower

Melbourne-based property fund manager Forza Capital has picked up a prominent office building in Brisbane’s “Golden Triangle” from Mirvac for $86.7 million.

The property, located at 340 Adelaide Street—on the corner of Adelaide and Wharf Streets, comprises 12,800sq m of B-Grade office space across 17-levels, together with a ground floor cafe and parking for 100 cars.

In recent years, Mirvac has refurbished the building, upgrading the lobby and repositioning the external ground plane and retail.

Mirvac chief investment officer Brett Draffen said the proceeds from the sale will be redeployed into prime and A-grade commercial assets as well as its $22.4 billion development pipeline across the residential, office and industrial sectors.

The deal, negotiated by CBRE’s Flint Davidson, Tom Phipps and Bruce Baker, represents an 11 per cent premium to its book value in June.

“As the first major, post-Covid capital markets transaction in the Brisbane CBD, this deal highlights the demand from onshore investors for quality office assets,” Phipps said.

Golden Triangle Tower1

The building is 93 per cent leased to tenants Covermore, Cerebral Palsy League and Oracle, and has a weighted average lease expiry of 3.8 years. Image: Supplied

“As travel restrictions ease we expect the market to awaken in the first half of next year fuelled by historically low financing costs and Brisbane’s attractive yield spread.”

Forza Capital director Ashley Wain said the asset represented exceptional value, given the building’s comprehensive refurbishment program, and was transacted with a high degree of certainty over a period of one month.

“Shortly after Covid struck, [we] identified the opportunity to prepare our investor base of sophisticated investors for opportunistic property investments.

“Speed to transact was anticipated to be critical and we believed getting early capital commitments and being able to transact quickly would be paramount to securing new investments on attractive metrics,” Wain said.

The acquisition represented $52.5 million of equity from Forza’s client base of family offices, high net worth advisory groups and individuals, and will now sit in the newly-established Forza 340 Adelaide Street Fund.

“The uncertainty in office investment markets has created really attractive investment metrics which, when combined with highly competitive debt funding, results in a target 8 per cent per annum distribution yield over the first five years of the investment,” Wain said.

Last week, Dexus listed a neighbouring A-grade office tower, located at 10 Eagle Street, with price expectations of $300 million.

 

The post “Mirvac Sells Golden Triangle Tower for $87m” by Ted Tabet appeared first on the theurbandeveloper.com Blog

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Brisbane

Yeronga trophy home fronting the Brisbane River listed

Brisbane River

A riverfront Yeronga, Queensland trophy home has been listed without a price guide.

The five bedroom, five bathroom abode is being marketed by Heath Williams and Nick Hurwood of Place.

Situated at 363 Brisbane Corso, the tri-level home fronts the Brisbane River.

Set on 916 sqm, it features two swimming pools and a private boat pontoon.

Other features include full-height stacked glass sliding doors opening out to a covered balcony which capture sweeping Brisbane River views as well as a ground-level rumpus or games room equipped with a bar, a projector and a linked balcony.

It is located seven kilometres from the CBD.

 

The post “Yeronga trophy home fronting the Brisbane River listed” appeared first on the propertyobserver.com.au Blog

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Brisbane

Mirvac offloads Brisbane office building for $87m

Mirvac office building

Mirvac has offloaded a 17-storey office building in Brisbane to Melbourne-based property fund manager Forza Capital for $86.75 million in one of the first institutional grade office deals to take place in the city since COVID-19 struck.

The building, which is in Brisbane’s ‘Golden Triangle’ at 340 Adelaide Street, had undergone an extensive refurbishment by Mirvac and sold at an 11 per cent premium to its last book valuation in June.

The property, which is 93 per cent leased to tenants such as Oracle, Cover-more Insurance and the Attorney General’s Office, has a 3.8 year weighted average lease expiry.

Brett Draffen, chief investment officer at Mirvac, said proceeds from the sale would be redeployed to grow its asset creation business and would allow the group to “capitalise on opportunities to create Australia’s next generation of workplaces, residential communities and mixed-use precincts”.

The office tower is the first asset to be acquired by Forza Capital following a $240 million capital raising from its client base of family offices and high net worth advisory groups in September and will sit in the newly established Forza 340 Adelaide Street Fund.

Forza Capital director Adam Murchie said they had advised their investor base to be prepared for opportunistic property investments shortly after COVID-19 had struck.

“Speed to transact was anticipated to be critical and we believed getting early capital commitments and being able to transact quickly would be paramount to securing new investments on attractive metrics.”

Forza Capital director Ashley Wain said the uncertainty in the office market had created attractive investment metrics.

“When combined with highly competitive debt funding [the metrics] result in a target eight per cent per annum distribution yield over the first five years of the investment.”

The deal was negotiated by CBRE’s Flint Davidson, Tom Phipps and Bruce Baker, and Matt Lawrence arranging the debt.

“As the first major, post-COVID capital markets transaction in the Brisbane CBD, this deal highlights the demand from onshore investors for quality office assets,” Mr Phipps said.

“As travel restrictions ease we expect the market to awaken in the first half of next year fuelled by historically low financing costs and Brisbane’s attractive yield spread.”

 

The post “Mirvac offloads Brisbane office building for $87m” appeared first on the afr.com Blog
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