Property market update: Brisbane, July 2018

Despite a marginal drop of 0.1 per cent over the quarter, house prices in Queensland’s capital rose by 2 per cent year-on-year. Meanwhile, unit prices feel by 1.2 per cent over the quarter and 6.4 per cent in the past 12 months.

One of the factors affecting the movements of the market is the number of interstate migration. Queensland saw the second largest number at 21.9 per cent, following Tasmania.

Of the 17,246 internal migrations in the state, 846 went to Brisbane while the majority moved into the Gold Coast, Sunshine Coast, Moreton Bay, Cairns, Ipswich and the Scenic Rim.

According to Consolidated Properties Group’s Don O’Rorke: “Government projections indicate that by 2026, Greater Brisbane’s population growth is likely to be led by the 20 to 24 year-old age group, as more young professionals move into the city to be educated and find work.”

Aside from population growth, the significant spending in infrastructure is also believed to influence positive changes in the market.

Supply and demand

Like in most capital cities, the number of new listings in Brisbane over the past month has declined by 3.2 per cent to 3,789 while the total number of listings were up by 1.2 per cent to 19,738.

Across the country, the recorded number of new listings in July is the lowest point since 2012. In contrast, the number of total listings is the highest point since 2012.

As stocks declined, average asking price for houses rose by 0.6 per cent to $617,000 while average asking price for units decline by 0.1 per cent to $381,400.

CoreLogic’s Cameron Kusher believes that this trend is likely due to reduced demand, particularly across the capital cities, as well as potential vendors holding off putting stock up on the market.

Apartments gaining popularity

In a new survey by Place Research, the apartments are gaining grounds on houses across Brisbane.

Last year, 52 per cent of investors preferred a house while only 20 would opt for an apartment. After the first half of 2018, the number of investors looking for house has decreased to 49 per cent while the number of those wanting to buy a unit increased to 26 per cent.

Investors are also choosing properties near the central business district, particularly where there’s easy access to public transport.

According to Mr O’Rorke, keeping in mind that Brisbane’s population growth will be led by young professionals, the rise of the apartment market should not be surprising. In fact, it could very well be an indication of smart property investing.

He said: “The first rule is to know who your market is — or in the case of property investors, who the likely tenant will be.

“This younger demographic is likely to either be renting or looking at taking a first step on to the property ladder, so an apartment makes sense in terms of securing a tenant or reselling to a younger buyer.”

“And given the billions of dollars in new infrastructure being delivered in the CBD, it’s no surprise that investors are lining up for inner city properties,” the property expert highlighted.

Rental market

Despite the rising popularity of apartments, the median rent for units remained unchanged at $400 per week this month. Median rent for houses also held steady at $400 a week.

Properties, in general, are being rented rented faster, with average days on market at 24 days for both apartments and houses, more than 4 per cent faster than last month.

The slow growth in Brisbane’s rental market is an opportunity for investors to utilise unique marketing strategies to make their property stand out from the sea of stocks available in the market.

Rent.com.au’s Greg Bader said: “The boom phase of the market is fading, and it’s likely down to first home buyer incentives and a deluge of new apartments on the market.”

Aside from affordability and incentives, tenants are also likely to be attracted by innovative marketing tools such as marketing packages on major portals, targeted social media campaigns and illuminated or picture signboards.

Risks: Opportunity or trap?

Despite the positive growth drivers in the city, some experts still remind investors to be cautious and ultimately do due diligence before jumping into any investment in Brisbane.

While the current state of the city’s market is appealing as it moves away from the declines recorded in Sydney and Melbourne, Propertyology’s Simon Pressley said that Brisbane hasn’t actually had any significant movement in the last five to seven years.

According to the property expert: “Is it a bad decision to invest in Brisbane or regional Queensland? No, but I would just say to investors: Don’t just adopt your default behaviour and pick Brisbane as the next opportunity up the road; there’s a whole country out there to look at.”

Even if the property market of the entire state of Queensland has been consistent in performance, the fact of the matter is it has not performed well for a decade.

Brisbane, in particular, has not been on top considering other regions in the state. The Gold Coast, Sunshine Coast and Cairns have performed better than the state capital, which reflects the lagging economy of the capital city.

Mr Pressley said: “It's a nice city, don’t get me wrong, but nice doesn't make things grow. There needs to be something different about it to really, really draw people there.”

“Whether that’s attractions to drag someone to live there, or whether that’s attractions to motivate people to create a different business; we’re in a world-wide tourism boom. We have been since 2012. Brisbane hasn’t done anything to take advantage of it,” he added.

Strategy

If you find yourself attracted by the investing opportunities in Brisbane, you are definitely not the only one. Investors and home buyers alike are seeing the Queensland capital as an affordable alternative to Sydney and Melbourne, both of which are currently not in their best state as an investment market.

While Brisbane have not shown any signs of being directed towards the same astounding growth seen by Sydney and Melbourne, the capital city stays afloat, supported by good population growth and economic fundamentals.

In fact, the Queensland government is set to spend $139.7 million on infrastructure, capital grants, tourism and natural resources to boost the state’s economy.

Having said that, experts remind investors to the ‘hot spotting trap’ or simply following the crowd.

Every investment decision must be influenced by your goals, capabilities and limitations as an investor. As such, it is strongly recommended to spend time and effort doing research on investment opportunities across states and territories.

Some of the most important points for research are government plans for growth and development, past and present capital growth rates and the level of infrastructure and amenities, including roads, public transport, hospitals and schools.

Demographic information, such as population growth and local residents rent proportion, will also gauge the potential growth in the area.

Engaging with local councils and property professionals is also recommended to further your knowledge about the property market.

Property investor Mark Shearwood said: “Brisbane is like a volcano. What happened to the Gold Coast, I think that's what's going to happen to Brisbane. It's just bubbling away.”

“You've got to look at the logistics of it all and the economics of it all, right? When you study it, there's no other way—Brisbane has to explode. The government is doing mountains and mountains of things to improve that city, and they can go wider,” he added.

At the end of the day, it’s best to remember that property investment is a long-term commitment, and while Brisbane is not exactly in perfect condition for investment, its local economy could be an indication of a bright future.

Hotspots

Demand in Brisbane has been up by 5.9 per cent year-on-year, with demand for houses rising by 6.7 per cent and demand for apartments rising by 4.5 per cent.

The overall median price, which rose by 1 per cent to $485,000, as well as the relatively positive price growth continue to attract investors looking for an affordable but worthwhile entry to the property market.

Brisbane’s eastern region recorded the most increase in demand, with a rise of 16.7 per cent. Its median price rose by 5.7 per cent to $556,000.

Meanwhile, the northern region saw a 6.0 per cent rise in demand and a 1.9 per cent rise in median price to $540,000. Western Brisbane also saw a rise in demand at 0.1 per cent and median price increase of 0.6 per cent to $633,500.

The southern region saw a decline in demand at -2.1 per cent and an increase in median price at 1.6 per cent to $635,000, while the inner city saw a significant rise in demand at 13.7 per cent but a decline in median price at -3.1 per cent to $628,000.

Among the most popular suburbs for houses in Brisbane are:

1. East Brisbane
2. Indooroopilly
3. Paddington
4. Holland Park
5. Wilston
6. Chandler
7. Windsor
8. Coorparoo
9. Newmarket
10. Toowong

Meanwhile, the most in-demand suburbs for apartments are:

1. Graceville
2. Mansfeld
3. Tarragindi
4. Camp Hill
5. Red Hill
6. Ashgrove
7. Holland Park
8. Tingalpa
9. New Farm
10. Paddington

Track the major market movements in Brisbane and get to know more about the capital city’s growth drivers and hotspots through Smart Property Investment’s April 2018, May 2018 and June 2018 market updates.