South East Queensland is a popular investment destination, but are you too late?
One property investment expert said that while everyone is “banging on” about South East Queensland as the next big thing, the reality is that some of those south-east markets have already reached their peak.
Right Property Group director Victor Kumar said that some people aren’t “cottoning on” to it because they are still seeing the prices and the yields in South East Queensland through Sydney or Melbourne or Perth eyes.
“But the reality is, if you take Logan as an example, we used to get 7 per cent yields for houses there; now we are getting 4, maybe 5, per cent yields. So, that is showing that that market from a price point of view is starting to peak.
“We may think that in SE Queensland that a $400,000 property is really cheap, but you may be paying full retail for that.”
Mr Kumar said that he’s also noticed that valuations in the area are not coming in to his expectations.
“The valuers are starting to become really conservative in the area, which is a precursor to the valuer saying the market is cooling off.”
He also said that there is a lot more rental property available in the area.
“This is a product of a lot of investors getting in to the market,” Mr Kumar said.
“This adds to the investment pool and that drops the rent down, so you have a combination of these factors which is starting to flatten out that market.”
Brisbane
Instead, Mr Kumar predicts that Brisbane is poised for some excellent growth.
“Brisbane is absolutely a good market to invest in, and the reasoning might not necessarily be just because of Brisbane itself,” the millionaire added.
“It’s got to do with Melbourne and Sydney as well. If you compare the median house pricing between Sydney and Brisbane, what you will find is that traditionally the difference between metro Sydney and metro Brisbane is about 26 per cent. Right now, we are sitting at around a 76 per cent differential.”
This is because, along with Sydney being over inflated, Brisbane hasn’t had any major growth.
Mr Kumar added that from a property cycle point of view, Sydney and Melbourne fire first and then Brisbane follows.
“So, if you are looking at it from the point of view that the major market is between Sydney, Melbourne and Brisbane, there is a big gap opening up between the median pricing in Sydney and Melbourne and Brisbane,” Mr Kumar said.
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