It’s the annual winter prestige property pilgrimage from the southern states to the Sunshine Coast that leading local agent Vicki Stewart has come to know so well.
“People from Sydney and Melbourne come up the first year and fall in love with the climate and the area,” says Ms Stewart, the director of Stewart Property. “They return the next year and don’t want to go home again, so start looking at places to buy.
“And by the third year, they come, and just never go home.”
She did exactly the same thing too, 34 years ago, on a visit from Sydney, and says that migration from daydreamer to new owner causes a dramatic spike this time every year in the market.
Real Estate Institute of Queensland chief executive Antonia Mercorella agrees. “Many travel for a holiday and fall in love with our world-class beaches, fine dining and luxury retail shopping precincts,” she says.
“The seeds are planted and while our prices are high compared with the rest of Queensland, when compared with Sydney or Melbourne prices they’re an absolute bargain.”
At the same time Noosa, at the top of the Sunshine Coast market, has been performing exceptionally well and in the 12 months to March 2019 has hit 8.7 per cent growth, making it Queensland’s strongest area, as against Brisbane’s one to 3 per cent, and the Gold Coast’s 2 to 3 per cent. Since 2014, Noosa prices have risen 44 per cent.
There have been some stellar sales too in the past 18 months, including the $15.2 million sale of tennis ace Pat Rafter’s mansion on Noosa’s Sunshine Beach, followed by the Sunshine Coast record-breaking $18 million purchase of a seven-bedroom trophy home nearby. “But as a general rule of thumb, what you’d buy in Sydney for $20 million will cost you just $8 million here,” says Ms Stewart.
Domestic tourism – of which this coastal region is “the Australian rock star” according to Visit Sunshine Coast chief executive Simon Latchford – always sparks the property market, while its “Hamptons-style cool” continues to drive it on and up.
“The market does leverage off tourism but, often, as soon as people arrive they realise its strengths,” Mr Latchford says. “There are two airports, lots of new infrastructure, a laid-back lifestyle, an extraordinary climate with no cyclones, crocs or box jellyfish, a community atmosphere in a place that hasn’t been allowed to develop too fast, and Brisbane is only an hour and a half away.
“If you want to savour life as it was back in the ’70s, then this place can offer that environment.”
The prestige market from $5 million to $12 million is particularly strong at the moment, with demand surging and stock so tight that one buyer bought a home at Noosa Heads in the past few weeks for $2.9 million over the phone, sight unseen.
“We now have a lot of buyers making multiple offers and there’s not much stock as people are making generational purchases; they’re planning to keep it long-term and hand it down to family rather than sell it,” says agent Nic Hunter from Tom Offermann Real Estate.
“Noosa has always been the pinnacle of that prestige end of the market, and people just love the relaxed lifestyle and village atmosphere.”
Four homes in the area
For sale by informal tender with a guide of more than $4 million, this five-bedroom home has a spectacular waterfront position, with beautiful mountain views and a peaceful position.
“As with all the best homes on the Sunshine Coast, you have to consider the cost of not buying now,” says agent Adrian Reed of Reed & Co.
With deepwater access and an upgraded pontoon to allow the owner to keep anything up to a 58-footer safely moored at home, this family house was designed by Frank Macchia to have a true north aspect.
The home has an in-ground pool and a steam-room, while a recently-installed solar system generates over 100kWh of power in summer and is fitted has battery storage.
It’s going to auction on July 14 through Loren Wimhurst of Next Property Group, with a guide of $4.5 million to $5.5 million.
Floor-to-ceiling windows in almost every room make sure that the stunning views are maximised and that this house is flooded in natural light.
The media room has its own cosy fireplace, there are electric shutters and blinds and an openable roof to control light and temperatures, and underfloor heating on the ground level and in the bathrooms that service the master bedroom.
The home is for sale with a guide of $3.3 million, with Joe Langley of Universal Property Sales.
Billed as a 6-star resort-style home, this home has great north-east ocean views and is just a short stroll to the beach, cafes and shops from its large 1,200sqm block.
There’s an internal lift to each floor, a grand entry foyer, a sound-proofed cinema, in-ground pool and pool room, with landscaped gardens.
It’s for sale with a guide of $3.3 million, through agent Craig Porter of Next Property Group.
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;
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;
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.
The narrative of oversupply and under-performance in Brisbane units has dominated conversations around south-east Queensland property for almost 5 years.
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.
It is worth noting that oversupply is very much a unit-centric story. Houses across Brisbane have actually seen quite strong capital growth returns in the past few 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.
In other words, the past cycle saw units significantly “under-perform” relative to housing stock in Brisbane. The rolling annual growth figure shows that unit values have largely declined since July 2016.
In 2016 units were being built across Brisbane at an unprecedented level. Australian Bureau of Statistics 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.
It is difficult to understand the exact impact this supply has on the Brisbane unit market, given that ABS completions data is currently unavailable beyond a state level on a quarterly basis.
However, cross-referencing the approvals dataset with the ABS data by region series, suggests about 75 per cent of state-wide unit construction was centred within the greater Brisbane metropolitan region.
The time series suggests that the lag between approvals and completions varies from about 1 to 2 years.
Since 2015, unit approvals have been moderating in response to subdued capital growth performance. The latest quarter of data shows approvals are 46 per cent below the decade average of approvals.
This means the delivery of new units across Queensland is likely to be subdued over 2020.
Corelogic project data suggests unit completions across Brisbane over 2020 will average about 4,000 per quarter, reflecting the long-term average.
But supply is only one side of the story. Looking at how population growth has tracked relative to unit completions brings further clarity to value declines in units over 2016.
The figure below shows “housing demand” relative to completions across Queensland. Housing demand represents the number of dwellings needed to accommodate additions to population at each quarter, divided by household density of 2.6. The housing demand is presented as a rolling annual average.
Future housing demand is also estimated based on the Queensland government “median” scenario of population projections, suggesting about 8,000 dwellings are required to house the growing population each quarter to June 2021.
There has been a convergence between the number of dwellings required and supplied since the start 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.
This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article.
Where can first-home buyers find a home under the First Home Loan Deposit scheme cut-off?
First-home buyers hoping to take advantage of a new government scheme will have to look to the outer city fringes to find a free-standing house, new analysis shows.
But, they will be able to choose from up to 40 per cent of all properties, including units in each capital city.
The federal government’s First Home Loan Deposit scheme, introduced at the start of this year, helps first home buyers to purchase a property under various price caps.
Designed to enable the purchase of a modest residence, homes worth up to just $700,000 are eligible for Sydney, while the cut-off is $600,000 in Melbourne, $475,000 for Brisbane, $500,000 in Canberra and $400,000 in Perth.
It lets buyers avoid paying lenders mortgage insurance even with a deposit as low as 5 per cent, for singles on an income of $125,000 or less, or couples with a combined income of $200,000.
The government then goes guarantor for the rest of the deposit, in effect allowing people to take out low-deposit loans without paying lenders mortgage insurance or going to the “Bank of Mum and Dad” to top up their deposit.
Only 10,000 loans are available nationwide per financial year, and since the scheme was introduced at the start of this year, 6500 of those spots have already been snapped up.
So, where can these buyers find a home under the price caps for each capital city?
An analysis by Domain of reported property sales in each capital city from July to December last year showed just where first-home buyers had the best chance of jumping onto the property ladder.
Brisbane had the highest percentage of any capital city of property sales under its threshold of $475,000 – with more than 13,500 of its 33,315 sales meeting the price cut off.
The lowest percentage of sales under the threshold was in Canberra, which saw 34 per cent of total properties sold under its cap of $500,000 – and only 13 per cent of properties were houses.
What is available for first-home buyers?
Percentage of property type sold below the price caps
FHLDS price cap
Domain economist Trent Wiltshire said the scheme was designed to target a “modest home”.
“I think the price caps seem pretty reasonable, when you look at all the capitals you can buy around 30 to 40 per cent of all properties put up for sale in the second half of last year,” Mr Wiltshire said.
He said houses in the inner and middle suburbs that met the price caps were hard to come by, but that in the outer suburbs there were more options.
“It’s pretty obvious that it’s going to be hard to buy a house in the inner city,” he said. “Also, in all the capitals, quite a high proportion of units are available.”
Melbourne and Darwin also saw a low number of house sales that met their price caps of $600,000 and $375,000 respectively.
Areas with the most house sales in Melbourne included the statistical areas of Wyndham – which included suburbs Werribee, Hoppers Crossing and Point Cook – Casey South (Cranbourne, Hampton Park, Narre Warren South) and Whittlesea-Wallan (Bundoora, Mill Park, Mernda). More than half of all house sales in these areas were for less than $600,000.
First National Westwood agent Rob Westwood said his agency, based in Werribee, purposefully put properties on the market on Christmas Eve last year in the hopes of catching the eye of First Home Loan Deposit scheme punters.
“We definitely noticed the difference straight away,” Mr Westwood said. “That first Saturday back after New Year’s, there was a big influx of first-home buyers.”
The most house sales in Brisbane were in the Brown Plains statistical area, which included suburbs Chambers Flat, Boronia Heights and Marsden. The most units were sold were in the Brisbane inner area, which included Brisbane City, Fortitude Valley and New Farm.
LJ Hooker Browns Plains agent Scott Brannigan said he had seen more first home buyers interested in taking advantage of the home loan scheme.
“It’s a good time to get in, especially if you’re a first-home buyer, with all the incentives available.”
Brisbane: first-home buyers using the FHLDS have plenty of choice in Brisbane’s outer suburbs and also units in the inner-city
Proportion of sold properties under Brisbane’s $475,000 price cap, by SA3 region
Canberra’s price cap has been set at $500,000, and in nearly all districts except Weston Creek, 30 to 40 per cent of properties sold were under the threshold, the analysis found.
But first-home buyers may need to look for an apartment, with very few houses sold below the price point in most regions.
Canberra: there are few options for first-home buyers using the FHLDS to purchase a house
Proportion of sold properties under Canberra’s $500,000 price cap, by SA3 region
Perth, Adelaide and Hobart all had cut-offs of $400,000.
In Perth, the areas south of the city were most accessible, with 82 per cent of homes sold in Kwinana below the price cap. Rockingham offered 66 per cent of homes under the cut-off, with 61 per cent in Mandurah.
Perth: most opportunities for first-home buyers using the FHLDS are in Perth’s southern suburbs and in Mandurah
Proportion of sold properties under Perth’s $400,000 price cap, by SA3 region
For Adelaide, Onkaparinga near the Mclaren Vale wine region had the most house sales that would suit first-home hopefuls.
In the northern suburbs, 87 per cent of homes in Playford were below $400,000, and 76 per cent in Salisbury.
Adelaide: most opportunities for first-home buyers using the FHLDS are in the north
Proportion of sold properties under Adelaide’s $400,000 price cap, by SA3 region
In Hobart, the North West area was the most popular for houses under $400,000.
Some 72 per cent of sales in the Brighton region were accessible, while the inner suburbs proved a challenge with only 12 per cent of homes below the threshold.
Hobart: for first-home buyers using the FHLDS there are few options under the price cap in the inner suburbs
Proportion of sold properties under Hobart’s $400,000 price cap, by SA3 region
This article is republished from www.domain.com.au under a Creative Commons license. Read the original article.