Office landlords are still reaping the benefits of the banking royal commission with government departments, lawyers and compliance consultants the fastest-growing tenants across the country.
The sector accounted for the lion’s share of office leases signed in the past year, followed closely by the tech industry. Flexible office space also remains in demand but the pace of expansion has declined after the failed 2019 proposed WeWork float.
The Property Council of Australia’s latest office market report for the six months to January shows Sydney and Melbourne are sitting at record low vacancy levels of just over 3 per cent.
Office vacancy rates fell in five of the eight capital city markets surveyed, while more than one million square metres of new office space prepares to come onto the market this year.
Overall, the national vacancy rate decreased marginally over the last six months to 8.3 per cent compared with 8.4 per cent in the previous period, the report said.
While there is new supply of towers coming onto the markets, mainly in Melbourne, a significant amount has already been pre-leased.
In Sydney, space available dropped marginally to 3.2 per cent, while Melbourne had the lowest record level of 3.2 per cent. In the suburban markets, East Melbourne was the best performing market with 2.4 per cent vacancy, followed by Sydney’s Parramatta at 3.2 per cent and Chatswood at 3.7 per cent.
One of the latest deals is by Dexus Property which has signed a lease with law firm Ashurst for the new South Tower at the $1.5 billion 80 Collins Street, Melbourne development.
Ashurst will join fellow legal firm Herbert Smith Freehills in the same tower for a lease of 10 years across 4427 square metres over three levels of the 35-storey tower.
There is also an existing 47-storey adjoining tower, a new retail podium and a new boutique hotel in the Dexus and Dexus Wholesale Property Fund-owned complex. Overall the office components are close to being fully leased.
“Our office markets are a great economic barometer of our cities and these numbers show good demand for quality office space in most centres around the country,” Ken Morrison, chief executive of the Property Council of Australia, said.
“Last year saw a rise in inquiries from government, with a number of major requirements coming to market and strong demand in the sub-10,000 square metre bracket,” Nick Evans, Colliers International head of Government Property Services and Strategic Accounts, said.
“This was driven by lease expires, the establishment of the new Property Service Provider (PSP) arrangements and ongoing improvements to the way government property is managed.”
Justin Lam, Colliers International associate director of Tenant Advisory, said almost 50,000 sq m of office space transacted for the flex-space sector with approximately 18,000 sq m in the Melbourne CBD, and just over 10,000 sq m in Brisbane CBD.
“Although demand remains buoyant from flexible workspace operators, deal flow and new acquisitions have certainly slowed, following an unsuccessful IPO attempt by WeWork in 2019,” Mr Lam said.
What’s ahead for Brisbane’s property market?
Is it the right time to follow the sun and move into the Brisbane property market?
Well…according to Domain’s Property Price Forecasts February 2020, Brisbane is predicted to see some of the biggest house price rises in Australia over the next two years, rising by a whopping 8 per cent over the next 12 months alone.
That’s a question now being asked by more and more property investors who have been priced out of Australia’s two big capital cities.
Brisbane’s property downturn was quite shallow compared to the big two capital cities and following its recent upturn property values have reached a new peak.
However, Brisbane property prices are still about 55% of Sydney’s while household incomes are only around 12% lower, making Brisbane a very affordable alternative for home buyers and investors.
In fact more families and down sizers from the southern cities are moving to South East Queensland to cash-in for a lifestyle in the sun and this has made Queensland Australia’s #1 destination for internal migration.
With improving economic growth and jobs creation supported by the biggest infrastructure spend since the 2011 flood recovery, more and more investors are now looking for opportunities in Brisbane where properties are more affordable, rental yields are relatively higher and future prospects for the market look bright.
Looking ahead, economic forecaster BIS Oxford Economics says Brisbane will lead the capitals, with the value of Brisbane properties forecast to surge as much as much as 20 per cent over the next three years as economic growth underpins buying in the city’s relatively affordable housing market.
Are they right?
Is the Brisbane property market a good place to invest?
Like most things in real estate the answer is – it depends.
Brisbane is one of the world’s great cities.
Liveability, affordability, scale and future economic prospects all suggest that Brisbane is a market where you can confidently buy.
It’s true that Brisbane is likely to be the one of the best performing property market over the next few years, however 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 blog.
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.
Clearly Brisbane isn’t “one” property market
There are multiple markets in this diverse sprawling city; divided by geographic location, price point and property type.
Currently some markets are hot, while others are not.
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.
Fast facts about the Brisbane property market
1. Brisbane Property Market Prices
Brisbane property is finally going to have its turn in the sun with reasonable growth likely for well located, free standing houses and townhouses in small complexes.
While the overall figures for the Brisbane housing market remained flat over the last year the markets are very fragmented.
CoreLogic report that since bottoming out in June 2019, Brisbane’s dwelling values are now at new peals.
The following metrics show how the Brisbane housing market is improving:
- The average selling time of a home is 50 days (49 days a year ago) and
- Vendors are discounting their properties an average of 4.0% to affect a sale (4.9% a year ago)
- 6.5% fewer properties sold in Brisbane in the last 12 months compared to the previous year
But digging deeper into the stats freestanding Brisbane houses with 5-7 km of the CBD or in good school catchment zones have grown in value strongly.
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? Some properties over perform while others underperform.
However, it will be some time yet before the oversupplied apartment market starts to pick up.
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.
In the meantime, a healthy level of affordability at a time of increased interstate migration from Sydney and Melbourne and the return of local and interstate investors seeking strong rental yields plus capital growth should help make 2020 a good year for Brisbane property.
The Brisbane apartment market has been the focus of much negative attention due to excessive supply levels,.
A recent report by valuers m3property showed that there is still a significant oversupply of new Brisbane apartments, with around 1 in 4 new apartments in the Brisbane CBD remaining unsold.
However, the dramatic fall in apartment completions following the period of oversupply means that the stock excess will slowly be absorbed.
With only 2100 apartments commencing construction in 2019 and 1800 apartments currently being marketed, together with an increased rate of population growth, vacancy rates are likely to tighten over the next couple of years and this will drive strong rental growth, improved yields and a pick up in apartment prices.
The value gap between the East Coast capital city house prices is compelling – it is the largest it has ever been between Brisbane and Melbourne and the largest in 15 years with Sydney, according to CoreLogic.
A typical house in Brisbane is $437,000 cheaper than Sydney and $260,000 cheaper than Melbourne.
This level of affordability, coupled with positive economic signs means Brisbane is primed for future growth.
Within Brisbane, southern migrants and local upgraders are favouring premium property in blue chip inner ring areas close to the CBD and or the river.
In November 2019 SQM Research forecasts that Brisbane house prices will increase by around 6% in 2020.
2. Brisbane’s Property Market Trends
A solidly performing Brisbane property market beat predictions of doom and gloom against a backdrop of cooling southern markets and falling listings volumes, as the Brisbane housing market demonstrated admirable resilience, buoyed by steady population growth driving demand and underpinned by good economic fundamentals.
REIQ CEO Antonia Mercorella said the strength of growth proved that Queensland real estate was a good investment and could be relied upon to deliver capital growth.
“While other markets around the country are struggling in the face of tightened lending criteria and cooling investor appetite, the southeast corner of Queensland continues to deliver steady, sustainable growth,” Ms Mercorella said.
“Queensland’s economy is proving itself to be a good performer, against a backdrop of national gloom, with new jobs bringing population growth and demand for housing,” she said.
“The southeast corner is our powerhouse, without a doubt, but additionally we’re seeing strong results in regions that have been struggling.
“The resources sector is improving and we’re seeing regions such as Mackay and areas of western Queensland firmly in recovery.”
The apartment market has not fared so well and has delivered largely softer results across the state as this product battles against oversupply issues.
However rising demand will slowly absorb this excess stock, the only question remaining was just how long that would take.
Queensland has become the number-one destination for internal migration, taking over from Victoria in the latest ABS Census data, and our overseas migration is at its highest level in years, which means demand for accommodation will continue.
As always, the market will remain fragmented.
In the last year alone some areas underperformed, 68 suburbs far exceeded the average level of growth and almost a dozen Brisbane suburbs had double digit price growth over the last year.
3. Brisbane’s Rental Yield s
The good news for property investors is that rents are slowly on the way up in Queensland.
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 fallen over the last few years as this oversupply is slowly soaked up.
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.
According to the SQM, Brisbane’s gross rental yield for houses is currently around 4.2 per cent and for units was over 5 per cent
4. Brisbane Capital Growth
While Brisbane property prices are considerably more affordable than the other 2 east coast capital cities, Corelogic forecasts that one in 10 houses sold in Brisbane will fetch more than $1 million within 2 years.
The Brisbane property market is likely to record positive grow in tin 2020 as the underlying market drivers are now strengthening.
BIS Oxford’s 3 year forecasts to 2021 suggest that Brisbane will see the strongest growth of any property market over the next three years, jumping 13 per cent to a median of $620,000.
They expect Brisbane’s property market to continue to perform well at a time when many other markets are languishing.
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.
Local affordability and the lifestyle advantages has resulted in strong interstate migration (+17,426 last year) up 50.5% from previous year.
At the same time 12.7 percent of our overseas migrants are settling in Queensland and interest from foreign investors is rising.
Houses in Brisbane’s inner and middle ring suburbs offer the best prospects of long term capital growth.
Houses: 39% of Brisbane suburbs recorded a median house value less than $500,000 in September 2019, down from 50% five years ago.
The proportion of suburbs with a median value of at least $1 million has increased from 3% in 2014 to 7% in September 2019.
Units: 89% of Brisbane suburbs show a median unit value less than $500,000, compared with 91% five years ago. Suburbs with a median unit value of $1 million or higher has risen from 0.3% in 2014 to 1.3% in September 2019
Brisbane’s top performing regions 2019
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.
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
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.
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
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
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.
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 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.
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.
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*;
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 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
- Everton Park
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;
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
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;
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.
Other inner ring suburbs to keep an eye on;
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 property market oversupply
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.
However, with the supply of new and off the plan apartments in Brisbane’s CBD and inner ring currently outstripping demand, 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 Sydney investors ‘buying blind’.
With Sydney property prices having risen strongly over the last few years and now that the market has slowed down from it’s frenetic pace, these high prices plus tighter banking regulations limiting investor’s budgets has caused many Sydneysiders 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.
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.
Join the 105,000-plus Australians who subscribe to Michael Yardney’s Property Update or better still get a daily dose of insightful commentary in your inbox each morning.
19. Take advantage of investment advice
If you’re looking at buying your next home or investment property here’s 4 ways we can help you:
Sure our property markets are improving, but correct property selection is even more important than ever, as only selected sectors of the market are likely to outperform.
Why not get the independent team of property strategists and buyers’ agents at Metropole to help level the playing field for you?
We help our clients grow, protect and pass on their wealth through a range of services including:
- Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now!
- Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment grade property.
- Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice.
- Property Management – Our stress free property management services help you maximise your property returns.
This article is republished from propertyupdate.com.au under a Creative Commons license. Read the original article.
Revealed: The 10 Brisbane suburbs in which to buy property in 2020
These are the 10 up-and-coming Brisbane suburbs tipped to pay dividends for property investors in 2020.
THEY are called the up-and-comers; suburbs that buyers may have turned their noses up at five years ago, but which now have the potential to boom.
Brisbane’s housing market is ripe for investment as cheap money, buyer confidence and a lack of supply drive demand for property.
Industry experts are saying now is the time to buy, so using their tips, The Courier-Mail has compiled a list of the 10 best suburbs in which to buy property in 2020.
The results are based on criteria such as infrastructure, public transport, dining precincts, buyer demand, school catchments, neighbouring suburbs, capital growth and affordability.
And so as not to ignite a turf war, the chosen Brisbane suburbs are a mix of north and south locations.
1. BRIDGEMAN DOWNS
Distance from CBD: 13km
Median house price: $785,000
Number of house sales in past 12 mths: 137
This under-the-radar suburb was once only considered for prestige, rural residential properties, but is evolving into a solid investor option, according to ASPIRE Property Advisor Network.
“Increasing rents, falling vacancies, a rising population and affordable property options
are the gold standard when it comes to selecting promising investment locations and
Bridgeman Downs ticks all those boxes,” ASPIRE managing director Richard Crabb said.
“Most long-term Brisbane residents probably wouldn’t think of Bridgeman Downs as
an investor enclave, because it is so tightly held at approximately 85 per cent or more
owner-occupied, but this is exactly why we have pegged it as a great investment
Latest figures from SQM Research, a data company, show that the rental vacancy rate in Bridgeman Downs tightened from 4.5 per cent in November 2016 to 3.2 per cent in November 2019.
“A combination of rising rents and tightening vacancies is a key indicator of
investment income growth potential,” Mr Crabb said.
He said the suburb’s population had grown about 13 per cent over the past five years.
2. CARINA HEIGHTS
Distance from CBD: 8km
Median house price: $667,500
Number of house sales in past 12 mths: 60
Carina Heights set some records last year at the entry level price range, which has pushed
the average house price higher, to $667,500, according to Realestate.com.au — not bad for a suburb that once struggled to crack an average of $600,000.
“It’s the first-home buyers, the investors and, interestingly, the upsizers who have been attracted to this little pocket in the south,” independent buyer’s agent Wendy Russell said.
“Knock-downs and rebuilds are on the minds of home buyers who see value in Carina Heights now that an average house in neighbouring Camp Hill will set you back a whopping $220,000 more, at an average of price of $910,000.”
Ms Russell said she believed Carina Heights would continue to see the knock-on effects of being the next suburb over from blue-chip suburbs of Camp Hill and Norman Park.
3. EVERTON PARK
Distance from CBD: 9km
Median house price: $605,000
Number of sales: 110
If you haven’t checked out the newly opened ‘foodie laneway’ — Everton Plaza’s Park Lane, you’re missing out.
Described as the foodie epicentre for northsiders, Everton Park has hit the mark when it comes to attracting those who enjoy the café/foodie lifestyle, but don’t want to head into
the city to get it.
Ms Russell said lifestyle suburbs attracted home buyers and renters.
“Keep an eye on this little northside suburb because at an average house price of $605,000, it will undoubtedly attract the attention of investors and first-home buyers in 2020,” she said.
4. FERNY GROVE
Distance from CBD: 13km
Median house price: $620,000
Number of sales: 60
Ferny Grove has experienced a 23 per cent rise in views per home listing on Realestate.com.au, a property listings website, over the past quarter as buyers start to realise its potential.
Realestate.com.au chief economist Nerida Conisbee said the suburb was well catered for when it came to schools and parkland.
“It also has a train station, which is popular with buyers,” Ms Conisbee said.
“With a median of $620,000 it is a bit more affordable and is a price point that is appealing to investors.”
Distance from CBD: 10km
Median house price: $550,000
Number of sales: 81
Keep following the train line northwest and buyers with a budget of $600,000 or less will find Keperra.
Ms Russell said the flow-on effect from the suburb’s neighbour, Mitchelton, should guarantee property prices in Keperra rise this year.
“Just 10km from the CBD and with the train at your doorstep, the suburb is certainly an affordable option for first-home buyers looking to enter the market,” she said.
Distance from CBD: 29km
Median house price: $395,000
Number of sales: 95
In Greater Brisbane the suburb of Loganholme has experienced strong growth in its median house price in recent months, according to Real Estate Institute of Queensland (REIQ) southern Brisbane zone chair Rebecca Herbst.
“The attraction of Loganholme is its easy accessibility to the M1, whether you work in Brisbane’s CBD, or are heading to the Gold Coast on the weekend,” Ms Herbst said.
“Lifestyle is easy, the Logan Hyperdome is close by and the houses are affordable. It is easy to pick up a nice home for between $350,000 and $450,000.”
Other suburbs in Logan City that have experienced above average price growth and have further capital growth potential include Crestmead and Hillcrest.
“In Crestmead, affordability is the key,” Ms Herbst said. “Where else can you pick up a three-bedroom brick home for $250,000, only 30 minutes and 30km from the Brisbane CBD?”
Agent comparison site OpenAgent found Logan had some of the highest rental yields for houses, with Logan Central at 6.49 per cent.
Damian Piotto of Ray White Marsden said Logan was ideal for investors, particularly those from interstate.
“Entry-level housing is always appealing, especially to interstate investors when they compare local house prices — NSW in particular — and see significant value long-term,” Mr Piotto said.
“Rental returns are always going to be strong with the area located right in the middle of Brisbane and the Gold Coast, great public and private schooling, and the blue-collar industry within a 10 minute drive of these areas.”
Distance from CBD: 10km
Median house price: $685,000
Number of sales: 112
School catchments are all the rage in Brisbane and one of the most sought-after includes Mansfield.
Ranking number 2 in the 2019 Better Education Top 100 Public High Schools in
Brisbane, with a state overall score of 99, the Mansfield State High School catchment has become a hot spot for families.
Property Club president Kevin Young said homes in good school catchments could command an extra 10 per cent weekly rent, compared with suburbs outside the catchment area.
“The focus on property buyers moving forward is to identify new investment in schools that will boost demand for homes in the local area,” Mr Young said.
“With the start of a new school year, it is timely that property buyers in Queensland start to target areas where government is going to invest significant amounts of money in new educational facilities, which will boost the future demand for housing in these areas.”
Distance from CBD: 11km
Median house price: $572,500
Number of sales: 10
Let’s not forget Brisbane’s southwest, where one suburb to watch is Oxley.
A train ride from Oxley Station to Brisbane Central takes about 27 minutes and with an average house price of $572,500 it should be on the watch list for first-home buyers and investors.
“With neighbouring house prices up to $360,000 more (Corinda, $787,000, Sherwood, $932,500 and Graceville, $912,000), Oxley has the recipe for growth as an outlying
suburb on the train line with an affordable entry price for homebuyers,” Ms Russell said.
9. STAFFORD HEIGHTS
Distance from CBD: 8km
Median house price: $611,000
Number of sales: 115
Stafford Heights popped up on the radar of buyers in 2019 because of its affordability and accessibility.
“With an average house price of $611,000 it’s hard to pass up this suburb as an alternative to the more expensive neighbouring areas of Kedron and Gordon Park that had their day when the M6 Tunnel opened,” Ms Russell said.
She said the suburb’s proximity to Prince Charles Hospital and Westfield Chermside Shopping Centre made it appealing, along with the fact it was flood-prone.
“Stafford Heights could very well be in for continued growth in 2020 with so many ticks against it’s name — affordable, accessible and it doesn’t flood,” Ms Russell said.
Russell Duplock and Larissa Lawrence recently bought an investment property in the suburb through Ms Russell.
“We liked the general feel of Stafford Heights,” Mr Duplock said.
“There are a lot of young families in the area and a lot of property renovations happening too.”
Mr Duplock said the property was in a good school catchment and close to shops and restaurants, which he hoped would support capital growth.
“I feel Stafford Heights in the next couple of years is going to go well, considering it’s still affordable,” he said.
The couple also had no trouble leasing the property.
“We had four applications from the first open home and had it rented two days after, so plenty of interest,” Mr Duplock said.
Distance from CBD: 14km
Median house price: $625,000
Number of sales: 204
The bayside suburb of Wynnum offers lifestyle, infrastructure and affordability.
InSynergy chief property investment advisor Richard Sheppard said investors should consider the middle and outer rings of Greater Brisbane for houses, because the boom had largely started in the inner-ring housing suburbs and was rippling its way out.
Mr Sheppard said Wynnum, and the neighbouring suburbs of Manly and Lota, had strong market fundamentals that would underpin property price performance in the years ahead.
“That’s because, not only are they in the middle to outer ring areas, they offer
lifestyle while also being close to new and expanding infrastructure like the airport
and port, as well as road upgrades that will improve access to the CBD,” he said.
This article is republished from www.news.com.au under a Creative Commons license. Read the original article.
How is Brisbane’s unit market faring?
While the Brisbane housing market remains in full swing, a senior researcher has questioned the value of units in the Queensland capital.
In a recent blog post, Eliza Owen, head of research at CoreLogic, discussed whether Brisbane units were still in oversupply.
“The narrative of oversupply and underperformance in Brisbane units has dominated conversations around south-east Queensland property for almost five years,” Ms Owen wrote.
“At January 2020, Brisbane unit values remain 11.5 per cent below their 2010 peak to be at similar levels to 2007. But the latest data on property values, construction and population growth suggest that the story is changing.”
Ms Owen said it is worth noting that oversupply is “very much a unit-centric story”, with houses across Brisbane posting strong capital growth in recent years, “except for a brief, cyclical downturn over part of 2019”.
“In the previous trough-to-trough cycle that lasted between 2012 and 2019, annual house value growth outperformed unit growth by an average of 290 basis points. This is larger than usual discrepancies and is above the series average difference of 130 basis points,” Ms Owen said.
“In other words, the past cycle saw units significantly ‘underperform’ relative to housing stock in Brisbane. The rolling annual growth figure shows that unit values have largely declined since July 2016.
“2016 was a time when units were being built across Brisbane at an unprecedented level. ABS completion data suggests 21,342 units were completed, against a historic average of 11,585 per year. In the December 2016 quarter, the number of unit completions even eclipsed the number of houses delivered across the state.”
Furthermore, Ms Owen noted both CoreLogic and ABS data shows there’s been a convergence between the number of dwellings required and supplied since the beginning of 2018.
“With approvals data suggesting a decline in construction, and steady estimates of population growth, Queensland dwellings may fall into undersupply in the year ahead. Rental yields are also well above the capital city average at 5.3 per cent gross, meaning there could also soon be a turning point in investor demand.
“However, one unknown in this analysis would be projects that have stalled due to falling unit values in the past few years. If these re-commence, added supply could once again weigh down growth.
“The turnaround in the supply-demand dynamic is already being seen in unit values. Since bottoming out in June 2019, CoreLogic indices show the Brisbane unit market has recovered 2.2 per cent. This fits in with a more broad-based recovery, as reductions in the cash rate have reduced the cost of servicing debt, and increased incentive to purchase property,” Ms Owen concluded.
This article is republished from www.smartpropertyinvestment.com.au under a Creative Commons license. Read the original article.
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