Brisbane was one of only three capital cities to record growth in value during recent months. However, the momentum for full-on recovery remains elusive
Brisbane’s housing market staged the third-strongest performance for growth in dwelling values across the capital cities over the past 12 months.
According to the September stats from CoreLogic RP Data, dwelling values rose 4.6%, driven almost exclusively by the detached-housing sector.
Median house values climbed by 4.9% during the same period to $494,000. However, units fell behind, with just 2.1% growth in value.
“During the past month we have continued to see improving buyer interest and, concurrently, an increase in house sale prices in the Brisbane market,” says Linda Phillips, head of research at Propell.
“This is particularly apparent in the inner suburban areas with good access to the CBD. Well-presented homes in areas such as Clayfield [Brisbane North], Balmoral [Brisbane East], Indooroopilly [Brisbane West] and Tarragindi [Brisbane South] are seeing improved auction clearance rates and strengthening prices – buyer interest in each of these areas is strong in the $800,000–$1,000,000-plus house market segment.”
Although unit prices have shown only modest price growth, there have been an increasing number of sales, noticeably to interstate and offshore investors, Phillips notes. “Clearly, such buyers are interested in ‘new’ assets and, as such, are paying various premiums to obtain them – prices for three- to four-year-old units have remained fairly static in the past year,” she says.
Growth to remain subdued
While these numbers are encouraging, some experts have expected better performance overall.
“Brisbane has been the biggest disappointment this year,” says Andrew Wilson, senior economist at Domain. “There have been a lot of expectations of strong growth this year, perhaps tracking or slightly below the Sydney and Melbourne markets. So far it hasn’t delivered. It’s gone sideways instead.”
He explains that the modest growth has been due to the fragile confidence in the market. “Even the mid- to higher-priced suburbs that have been holding the market up seem to have fallen in spring,” he says. “The market lacks drive and energy. As such, I think it will only see a modest growth in the medium term.”
Investment sweet spots
Rich Harvey, buyer’s agent and CEO of PropertyBuyer.com.au, thinks Brisbane has a lot of potential, but he warns buyers to be very selective about where they buy.
“Brisbane offers good investment opportunity,” he says. “But you have to be careful where you buy. People say just buy within 5km of the CBD; however, there are a lot of apartments around areas such as Fortitude Valley and West End. There are stacks of apartments going up, so there’s a potential for oversupply in a couple of years. If you buy off the plan now, what’s going to happen in two years’ time when all these units come online and all these landlords are going to put their property onto the market? Imagine what’s going to happen to your rental return.”
Harvey suggests looking at areas with a low stock of apartments, such as Bulimba, Canon Hill and Morningside, which are located 5–6km from the CBD.
“Canon Hill, for example, consists of only 2% apartments, so it offers good opportunity to pick up something affordable and with growth potential.”
Harvey also likes Logan Shire for its capital growth and rental return potential. “You can still pick up a good-sized property for $300k–$400k and do a granny flat and reno,” he says. “You generally get 6% rental yield, but with a reno and granny flat, you could achieve 9% rental yield.”
If you’re looking to build, Harvey points to Berrinba, where you can still pick up a house and land package below the median.
Phillips adds that demand is also returning to the suburbs northwest of the city, such as Stafford Heights, Everton Park and The Gap.
“These have all shown above-average price growth in the order of 7% or more in the past year. The other common denominator is the high level of sales activity, which means that there is depth to the market. Median prices range from $530,000 in Stafford Heights through to $610,000 in The Gap, which, with its position in the hills, is highly sought after.”
Suburbs to the southeast such as Mount Gravatt, Mount Gravatt East and Carina are also worth watching, says Phillips. “These have easy access to the city via the motorway network, as well as to the Gold Coast. Median prices range from $560,000–$588,500, and relative to their sizes they enjoy a high level of sales.
“As buyers get priced out of the inner-city suburbs, these are well positioned to be the next suburbs that get attention, and the considerable gap in median prices between these and the inner-city suburbs offers the potential of above-average price growth,” says Phillips.
SUBURB TO WATCH
Moorooka: Quiet Outperformer
As Moorooka is so close to the Brisbane CBD, it’s not a surprise to see this suburb starting to grow strongly in value. During the past 12 months, median house values have climbed by 7.5% to $596,500, according to OnTheHouse.com.au.
Located around 7km from the Brisbane CBD, Moorooka is currently experiencing rapid and extensive gentrification, which is helping push property prices higher. It’s highly in demand among families with professional parents, thanks to its lifestyle offering.
There are 16 parks in the suburb as well as reasonable shopping amenities. It’s easily accessible via public transport, including trains and buses to the Brisbane CBD.
Investors looking to renovate or develop would find a lot of opportunities in the suburb, including a large number of old, tin and timber houses on big blocks of land.
Best areas to look include west of Toohey Park/Tarragindi Hill reservoir to avoid the noise from the Pacific Motorway. Beverley Hill and Errington, Millicent and Bracken Streets offer fantastic views of Mt Coot-tha, the Great Dividing Range and the Brisbane CBD.
Avoid Ipswich Road and High and Beaudesert Roads due to the high volume of buses passing through them.
