Property values in Brisbane are struggling a little, but the rental market could be looking at an upswing
Just as there have been hits to the property markets in Sydney and Melbourne, Brisbane has also experienced a slight blow, with the annual change in its growth rate slipping into the negatives for the first time in seven years. In its Property Pulse report for March 2019, CoreLogic indicated that house prices in this city fell by 0.4% in the 12 months to February 2019.
It seems that the time for investing in capital cities has passed, and many experienced investors are now looking to other markets in the Sunshine State for growth.
“[Savvy investors] could see that the period of growth was at the end of its cycle. They have increasingly looked interstate and to regional locations for both lower entry prices and better growth prospects. Right now all roads lead to southeast Queensland,” explains James Nihill, managing director of Patrick Leo.
“Southeast Queensland property prices really are on the brink of a growth phase after almost a decade of stagnation. It never experienced the crazy growth that the southern states went through, yet economic indicators are strong for sustainable, moderate growth moving forward.”
The low values in this market make it less susceptible to getting caught in the fallout from strict lending restrictions. Rising interstate migration also feeds population growth, while infrastructure efforts broaden the area’s appeal. Other regional Queensland districts that are expected to see growth in the near future are Logan and Ipswich.
Rental market looking rosy
Queensland has also become the place to be for investors looking to make profit off rent – it’s considered a landlord’s market “In Brisbane, where the construction boom hit its peak a couple of years earlier, we have witnessed the rental vacancy rate drop from 4.0% to 2.6% in February 2019,” says OpenCorp director Matthew Lewison.
“It took just 13 months for this incredible shift in vacancy rates, and our property managers are already telling us that rents are starting to creep up at a faster pace.”
The strengthening of the rental market comes off the heels of reports of growth population in Queensland, suggesting that a lot of this demand comes from new interstate migrants. This is likey to spur investment activity further.
SUBURB TO WATCH
ORMISTON: Apartments are properties of choice
Ormiston boasts a thriving unit market 25km from Brisbane, reflecting the rising popularity of the apartment market.
The median value came in at $410,000 following five years of double-digit growth since February 2014. In the past year alone, prices went up by 10.4%.
The average discount in this market is quite low as well, at only 2.8% as of December 2018. Meanwhile, rental returns are a strong 5.3%.
By contrast, house prices fell by 4.8% in the year to February 2019, pushing the median value down to under $650,000, despite an average discount of 4.9% in the year to December 2018.
Affordability: A low median unit value of just over $400,000 is keeping demand high
Location: Ormiston is less than an hour’s drive from Brisbane via the M1
