Brisbane continues to be a top spot for property investors looking for growth but until recently, it has already shown signs of weakness as the overall market succumbs to a downturn.
PK Consulting founder PK Gupta said investors must now choose carefully where to invest in Brisbane as its boom phase already weakened.
“At the beginning of 2021 you could throw a dart at a map of Brisbane map while blindfolded and you would have hit a growth location,” he said.
“But things have changed — now it’s not should I buy in Brisbane, but where and what should I buy.”
Mr Gupta identified three suburbs that are worth investing in and three that should be avoided.
“Some markets are still at the start of their growth cycle for certain types of properties, so the long-term upside is excellent,” he said.
Best suburbs to invest
Taigum
Situated 13 kilometres north of Brisbane, Taigum provides a mix of accommodation types from established housing, townhouses, and units.
However, Mr Gupta said it is important to note that the price gap between townhouses and detached homes has grown substantially.
In fact, the median value in Taigum is currently $600,000 for detached houses and $400,000 for townhouses.
“This is a huge disparity — I expect the value gap between them to close in the medium term. Townhouses are the most likely to rise in value as affordability drives more homeowners and investors away from housing,” Mr Gupta said.
While Taigum has had a stigma of being a low socio-economic area, Mr Gupta said the suburb has an excellent price-growth potential.
“Those who invest in townhouses here will see excellent value growth over the coming year or so.”
Northgate
Gentrification is a big driver in Northgate, which is eight kilometres north of Brisbane CBD.
“I’d even say Northgate is Brisbane's ‘hidden secret’ when it comes to investment — the demographic is shifting solidly away from blue-collar workers and toward upwardly mobile young professionals,” Mr Gupta said.
One of the main selling points of Northgate is its easy access to the Bruce Highway, the Gateway Motorway, major retail outlets, and the airport.
Townhouses are the best property type in this market, given its more affordable median value of $400,000 compared to the $1m for detached houses.
“Buyers are sure to recognise the excellent value townhouses offer relative to detached houses, and this gap will close rapidly,” Mr Gupta said.
Clayfield
Sitting among the best inner northern suburbs in Brisbane, Clayfield continues to be a top spot for investment.
Townhouses are also the best bet for this suburb — the median price of $500,000 makes this property type attractive for both investors and homebuyers.
Mr Gupta said one of the biggest drivers in this suburb is the shift of Clayfield College being an all-girls institution to a co-ed.
“It has an excellent reputation and there’s already been a spike in families moving to the area, keen to have their sons attend the school,” he said.
“On top of this it’s a very accessible suburb with heaps of retail outlets and lifestyle options on offer.”
Top suburbs to avoid
Toowong
This might be an arguable choice for the worst investment suburb but Mr Gupta said Toowong’s unit market is one of the areas investors should try to avoid.
“Toowong is an inner-city western suburb with great facilities and infrastructure, with the nearby University of Queensland is also a huge source of tenants,” he said.
“Yet, despite this, attached housing is oversupplied. The amount of unit construction underway in Toowong is enormous.”
Over the last 12 months, unit prices have gone up by only 2.2%, versus the 24.4% gain in the detached housing.
“That speaks volumes about the demand/supply imbalance of units, and they just keep building units in the area. I don’t see much potential for units to increase in value here at all,” he said.
Burbank and Chandler
Burbank and Chandler are two suburbs that benefited during the pandemic, with its low-density and acreage housing gaining traction.
However, despite them being positioned just 13 kilometres away from CBD, they might not see the same level of demand post-pandemic.
“I would expect a location like this to see an average capital growth rate of around 5% to 7% over the long term — most of its gains have been made in the past three year so it’s in for a prolonged period of flat, or even regressive, price movements,” Mr Gupta said.
It is true that gains in Burbank and Chandler hit 50% over the past three years but it appears the slowdown is underway, with rental yields now currently at 2% and days-on-market ballooning from 50 to 100 in just a few months.
Woodridge
Woodridge seems to be the worst suburb for all property types, even if the market is dominated by tenants.
Roughly 65% to 70% of all households in Woodridge are renting — while this is good when a rental boom is underway, Mr Gupta said the suburb could suffer greatly if measures are taken to ease the housing crisis.
“As vacancies rise in the future, landlords will be competing against each other to attract tenants – and there will be a lot of property on the market,” he said.
“Most of Woodridge’s value gains have been made in the past three years; its prices will flatten and could quite reasonably be expected to soften in the medium to long term.”
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Photo by Kon Karampelas from Pexels.
