Property market update: Brisbane, September 2018

Mr Koulizos said: "Since 2007, Brisbane and Adelaide haven’t really experienced that upward swing, so sooner or later, Adelaide and Brisbane are going to take off."

Moreover, consumer confidence has definitely improved in the Queensland capital. In fact, the Property Investor Sentiment Survey by PIPA revealed that 44 per cent of more than 800 investors believe that the best investment prospects are in Brisbane—up from last year’s 43 per cent.

In comparison, only 26 per cent and 8 per cent believed that investment opportunities are still available in Melbourne and Sydney, respectively.

“I’m not saying they’re going to have double-digit growth, but if you’re looking to park your money somewhere for the next five or 10 years, it wouldn’t be Sydney or Melbourne because they’ve already had their growth and it wouldn’t be Hobart, too, because it's already had its growth. Therefore, it’s Adelaide or Brisbane” the property expert highlighted.

Dwelling values

During the week ending 23 September 2018, Brisbane was the only major capital city market to avoid a price decline. The Sunshine State capital saw a 0.1 per cent decline while Sydney, Melbourne Adelaide fell by 0.2 per cent and Perth fell by 0.1 per cent.

Still, Brisbane remains as one of the most affordable capital city markets in Australia.

CoreLogic’s Housing Affordability report determined that the slow movements of dwelling values in the capital city gives housing affordability a chance to improve. As of this month, aspiring homeowners and investors take an average time of 8 years to save for a deposit, which is lower than Sydney’s 9.1 years and Melbourne’s 10.8 years.

Meanwhile, the share of income required for repayments currently sits at 31.9 per cent, which is still lower than Sydney’s 48.4 per cent and Melbourne’s 43.3 per cent.

Supply and demand

Like most capital cities, with the exception of Hobart, Canberra and Darwin, Brisbane experienced a decline in listings this September.

Meanwhile, vendor discounting across capital cities is currently sitting between 4.9 per cent and 7.3 per cent for houses and between 5.4 per cent and 9.3 per cent for units.

As in the previous months, houses remain more popular than units. In fact, the Property Investor Sentiment Survey revealed that 67 per cent of more than 800 property investors favour houses more than units. Interest in units had declined to 6.5 per cent from last year’s 9.3 per cent.

Similarly, metropolitan markets retain much of consumers’ confidence compared to regional markets, with 72 per cent of investors staying in capital city markets.

Rental market

Queensland is home to one of the highest proportions of renters in Australia and experts believe that population growth will aid the continuation of the existing trend.

Currently, 34 per cent of all households in the state are finding homes in the rental market and most of them are staying for the long term. 43 per cent of tenants had moved across the rental market for more than a decade, according to Premier of Queensland Annastacia Palaszczuk.

To improve the people’s experience in the rental market, the Queensland government announced the beginning of the ‘Open Doors to Rental Reform’ consultation program, which will allow renters, landlords and real estate agents to express their opinions on renting in the state.

As a result of the consultation, the government will reform the rental laws, particularly the tenancy laws which were last reviewed in the 1970s.

Minister for Housing and Public Works Mick de Brenni said that one of the main concerns raised during the early stages of the program is hanging up photos and paintings in rental properties. Pet ownership, regular inspections and timely repairs are also among the topics that people want to cover.

Feedback can be submitted online, voted in a snap poll or commented in a forum set up by the Queensland government. Suggestions can also be posted on social media with the hashtag #RentinginQLD or directed to officials through consultation activities that will be held in selected markets and shopping centres. The consultation program will run until 30 November.

Experts expect this initiative to further enhance the investability of Brisbane properties.

Mr Koulizos said: “The affordability of Brisbane compared to Sydney and Melbourne has really come into sharp focus in the past year.”

“Not only are investors considering the Sunshine State capital as an investment location, but a growing number are also choosing to migrate to take advantage of the significant value gap as well as Queensland’s enviable lifestyle and strengthening economy,” he added.

Hotspots

As the economy of Queensland continued to see mild but consistent growth, investors are offered multiple opportunities for wealth-creation in the state capital.

In fact, of all major capital cities, Brisbane, Adelaide and Perth offer some of the best high cash flow options in the property market, particularly in the more affordable corridors.

According to Mr Pressley: “Price growth cycles are still ahead for Brisbane, Adelaide and Perth. Fifteen kilometres south of Brisbane’s CBD, a typical house in the suburb of Coopers Plains can be purchased for just $400,000 and will be cash flow positive by $3,600 per year.”

“Cedar Vale, Russel Island, Blackstone and Gailes round out Brisbane’s top five and are cash flow positive opportunities, too,” he added.

The north of the middle and outer rings of Brisbane are currently seeing modest success. In particular, the suburbs of Ferny Hills, Eaton Hills and Strathpine offer great investment opportunities for less than $600,000.

LocationScore’s research identified Ferny Hills as one of the best options in the Queensland capital due to a notably high search interest of nearly 200 hits per listings and a relatively affordable median price of $546,000.

Moreover, the suburb boasts good-quality family houses on decent-sized suburban blocks, abundant shopping and lifestyle facilities and easy access to public transport.

Investing in Brisbane

At the end of the day, the Brisbane property market has exceptionally good fundamentals that make it one of the best locations for property investment today, including affordability, lifestyle and economic and population growth.

While the capital city’s performance over the past decade has not been as impressive as Sydney’s or Melbourne’s during their peak, it has been growing consistently albeit at a slow pace.

According to Propertyology’s Simon Pressley, the ‘lukewarm market’ has seen a median price growth of almost 40 per cent within the past 10 years, bucking the downward trend that most markets experienced due to flood events and the end of the mining boom.

“Despite the troubles, Brisbane investors who’ve waited are still well ahead. Best of all, the fundamentals look extraordinarily good for the next few years,” he highlighted.

Investors are ultimately advised to dig deeper than just capital city-level research. Doing due diligence must be refined to suburb-level in order to identify the best investment location and the most ideal strategy to implement for the short-, medium- and long-term.

Experts also remind investors to be careful about subscribing to ‘Sydney standards’. Instead, take time to understand the movements of each market in their respective cycles.

Comparing other property markets to Sydney and Melbourne, thinking that the next hotspot will follow the same pattern towards unprecedented growth, is a dangerous mindset to have, especially considering that there are no identical market cycles across the property investment landscape.

Right Property Group’s Victor Kumar said: “A lot of us in, myself included, have been tainted to some degree by the phenomenal growth we've had in Sydney, so we started using the same template to judge how different areas and different states are doing. But we need to judge these locations based on their individual market trends

“If you look at Brisbane, there has never been a near-vertical performance. It's gone on cycles, but they are shallower cycles, and that's something that we need to be mindful of when we're comparing to Sydney and other markets,” he concluded.

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 201, June 2018, July 2018 and August 2018 market updates. Visit Smart Property Investment's Property Market News page to get updates on other major capital cities.