Are you kicking yourself for missing the Brisbane property boom of 2022 and still wondering if Brisbane is a good place to invest?
A red-hot property market has officially gone cold, as property prices recalibrate.
During the property boom of 2020- 22 Brisbane property prices skyrocketed in excess of 40% in some suburbs, before falling close to 10% from their peak.
Of course, that is an average, meaning some areas and property types have fared far worse while for others, the downturn has barely registered.
But that’s not all… according to some media reports property prices could crash anywhere from 5% to 20% further.
Fuelling the flames is the fact that inflation remains high and interest rates may continue to climb.
The media speculation means that there is a great deal of economic uncertainty that is flowing down to our property markets.
So why would investing in property be on anyone’s radar in such uncertain times?
And after such a strong run, why should you even consider Brisbane?
Here are my thoughts…..
Short or Long Term?
The first thing you need to decide: are you considering investing for the short term or the longer term?
In my mind, property investing and in particular creating wealth through property, should be a long-term play.
There is too much risk over the short term and the cost of doing business – things like Stamp Duty, Selling Costs, CGT etc, are far too high.
As an experienced property investor myself, I would struggle to guess what will happen to property in the next 2-3 years.
However, I would be far more comfortable making an assessment over a decade or more.
History would suggest that over that time, there will be a property boom and a property bust, with a black swan type even thrown in along the way that no one saw coming.
Interest Rates will rise and fall, as will inflation and a range of other variables.
If I held an Investment Grade asset during this time, again history would suggest I will do very well.
The underlying message here is…. don’t make long term investment decisions by what is happening this week or even this year.
Instead, consider the underlying fundamentals over the long term.
Brisbane Fundamentals
With a softer market and property prices likely needing time to recover and reset, Brisbane could be easily overlooked.
However, our fundamentals remain very strong.
For the first time in 13 years, CommSec has reported that Queensland is now the best performing economy in Australia; the report highlighted population growth as Queensland’s biggest strength.
There is no doubt that Queensland has seen huge population growth this year, even with international borders closed due to COVID.
I would argue it has been the jobs growth that has fuelled record levels of migration.
Most will not be willing to make a life changing move, unless they have some form of employment on the horizon.
This is something that was sorely missing form the Sunshine State in the first half of the last decade.
So, with jobs and population growth at record highs, what happens next and will these important fundamentals continue?
Brisbane In a Decade
The biggest question for me is what happens next for Queensland and in particular Brisbane over the next 10 years.
The State has benefited from a bit of a perfect storm, after being led by a buoyant jobs market.
To the North of our state there has been a range of mining and infrastructure building, but inner Brisbane has really led the charge.
The last few years have seen a massive boost for central Brisbane with projects like the Queens Wharf, Airport precinct, Cross River Rail and Brisbane Metro kicking off.
This created more than 200,00 jobs in Greater Brisbane alone.
But as these projects come to an end, what will take their place?
We now have the answer……..
Fast forward to 2032 and bring on the Olympic Games.
History would suggest that the Olympics is not a magic bullet for property prices.
However, I believe it will kick off a new round of infrastructure spending around Greater Brisbane, potentially even more lucrative than we are currently experiencing.
There is the potential for more jobs on offer than ever before, meaning more population growth in an environment of short housing supply.
A recent article in the Brisbane Times showed new data form the federal government suggests Queensland’s population is expected to grow by more than 16% by the time it hosts the Olympic Games.
It will be Greater Brisbane that is predicted to benefit the most, as the population of Greater Brisbane overtakes those that live elsewhere in Queensland.
By 2032-33, there will be 3.082mil calling Brisbane home, while 3.075mil living in other parts of Queensland.
Brisbane will be transformed into a New World City.
In Conclusion
After a strong 18 months for the Brisbane property market and a recent correction, where to next?
No doubt there is a lot of uncertainty for our markets given an environment of rising inflation and interest rates.
Most will be put off by this until a greater level of uncertainty prevails.
However for more strategic investors, this period will present a window of opportunity for those looking to take a long term approach.
They realise uncertainty will likely be short lived and the underlying fundamentals for Brisbane remain strong.
A new round of unprecedented spending on infrastructure and amenities will only build in the back half of the decade, as we approach the Olympics.
Jobs and the growth of our population will go from strength to strength resulting in huge demand for property.
Combine that with a lack of new homes and mass shortages of property and this can only end one way.
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Header Photo by Valeriia Miller on Pexels.
