Brisbane’s market continues to post stellar results indicating ongoing growth, but the future is still clouded by broader economic uncertainties
Dazzling golden days are the hallmark of the Sunshine State, and now, as the years of wintery economic discontent start to recede, it seems they are lighting up the capital city’s property market too.
In recent times, a host of forecasts have been heralding good times for Brisbane. The city is benefiting from its affordability compared to the hyped-up markets of Sydney and Melbourne, along with state infrastructure spending and development.
For Brisbane this has translated to a median house price increase of 1.9% in the June quarter and 6.6% over the last 12 months, according to the Real Estate Institute of Queensland’s (REIQ’s) latest Housing Market Review. Further, average vendor discounting is down to 5.6%, compared to 8.9% in June 2013, while average days on market have fallen from 90 to 59.
REIQ acting CEO Antonia Mercorella says generally the review reflects increased buyer confidence and a sense of optimism about Queensland’s prospects for growth. They are seeing growth centred around the Gold and Sunshine Coasts as well as Brisbane, she says. But it is the Brisbane market that looks particularly strong, thanks to a combination of rising values, quicker selling times and lower discounting.
It is worth noting that while the latest RP Data Core Logic Home Value Index results also show growth in Brisbane, they indicate that this is a little slower. They record a 1.3% increase in dwelling values over the three months ending 31 August 2014, and a year-on-year increase of 5.4%.
Market breakdown
Australian Property Monitors senior economist Andrew Wilson says there is no doubt that, overall, the Brisbane market has improved over the last 12 months, after a lengthy quiet period. In his view, to get the true picture it is necessary to divide Brisbane up into the markets defined by its LGAs.
Doing so shows that the Brisbane LGA is at the epicentre of the market’s recovery. Within that, houses in the middle to upper price range in the inner- to mid-ring suburbs are in high demand.
On the other hand, the Logan and Ipswich LGAs remain pretty quiet, as do the northern suburbs of Brisbane, although they do seem to be attracting more buyers, Wilson says. Further, in the budget price range there has been only modest growth at best.
There is also a big surge of new apartments being built in areas like New Farm. He says there are valid questions about whether the underlying demand for them exists.
“With large-scale development comes the big upside of job creation and economic growth ... But, much like in the Melbourne CBD and on the Gold Coast too, I think there is the potential for an oversupply situation to emerge here.” However, investors are starting to look at Brisbane again because yields are high and prices are growing (at a rate of 5–7% over the financial year), he adds.
“There are opportunities for investors to get in early. Established houses have a good upside for growth. Even on the fringes there is potential for solid mid- to long-term growth.”
It’s all about the economy
Inevitably, the future of the market will depend on how the Brisbane economy goes. Wilson feels that, despite signs of improvement, it hasn’t picked up the level of expectations and still has some
way to go.
The unemployment rate, which is now around 6%, is a particular worry. Workforce participation could be the issue though, he says. “Confidence is up, so while there has been job growth, there are more people looking for jobs.”
Taking a broader perspective, according to the recent Deloitte Queensland Index 2014, the state’s economic situation is bright. It says Queensland’s economy is performing better than its residents realise. In fact, it predicts that Queensland will outperform NSW and Victoria over the coming years in terms of population growth (2.2% per annum), employment growth (2.5% over the next five years) and overall economic growth.
Chris Richardson, from Deloitte Access Economics, says that, with a well-spaced LNG project pipeline, resource export volumes picking up, and tourism numbers increasing, Queenslanders have a lot to feel positive about.
Investor caution urged
Meanwhile, the latest Herron Todd White report notes that, while Brisbane isn’t the market to avoid this year, there are some market sectors that investors should exercise caution in. These market sectors are:
• Inner-city areas where lots of smaller new units are planned or under construction – and, in particular, West End, areas throughout South Brisbane, and Newstead
• Detached housing in fringe suburbs 25–30km out from the Brisbane centre, especially those in secondary positions (eg main road frontage or in close proximity to industrial and commercial areas)
SUBURB TO WATCH
Tingalpa: Underrated suburb full of investment opportunities
The biggest surprise about Tingalpa is that the now up-and-coming area hasn’t been discovered sooner. It offers great value for money, especially when compared to many nearby suburbs, and is attracting a lot of interest.
Dane McInerney, from McGrath Estate Agents Wynnum/Manly, says there is huge buyer demand flooding into Tingalpa. “Prices are starting to be pushed up by this demand. There is also demand from interstate investors because of the healthy rent returns.”
Tingalpa’s location offers easy access to the gateway motorway for workers heading up or down the coast. It is also just 15 minutes from the airport. McInerney says these features make the suburb very appealing to FIFO workers.
While it is 10km from Brisbane’s CBD, there are a range of good amenities (from schools to shops) either in, or near, the suburb, and the CBD is easily accessible. Filled with parks, it is considered perfect for families.
The wide streets of Tingalpa feature a broad variety of property types, McInerney says. These include townhouses, which start from the low $300,000 bracket, and single-storey three- and four-bedroom homes on 400sqm lots, in the low $400,000 bracket.
Some of the best streets are Castlerea Street and Abbeyfeale Street, which largely feature houses on 500–700sqm blocks with four bedrooms, two bathrooms and two car parks. McInerney says these sought-after properties tend to sell for around $550,000–$650,000.
The growing appeal of Tingalpa means there is a fair amount of renovation and development going on. This is a suburb full of good investment opportunities, McInerney adds.
