Queensland saw excellent capital growth last year, but the experts expect 2008 to be a cooling period, with housing shortages and affordability issues coming to the fore.
Queensland's booming economy is attracting new residents in their droves, but while massive population growth has given the state one of Australia's best performing property markets of late, housing shortages and decreasing affordability are now beginning to bite.
"Despite the Queensland residential sector outperforming Australia over the last two years, the lack of sufficient new housing supply is driving up rents, and is holding up real estate prices for existing housing stock," says the Housing Industry Association's (HIA) Queensland Director, Warwick Temby.
Brisbane's property market in particular is showing signs of a slowdown, with the latest Residex figures indicating that monthly capital growth for houses in the rest of Queensland has overtaken that of the state capital.
According to Residex, March saw capital growth of 1.35% for houses in Brisbane and -0.09% elsewhere in the state. April however saw growth slow to 1.3% in Brisbane, while it grew to 1.5% for the rest of the state.
Last year saw excellent capital growth in Brisbane's property market but, as ANZ's latest housing report highlights, the city now has to contend with the twin issues of decreasing housing affordability and an ever-increasing population.
"In 2007, Brisbane house prices increased the most of any capital city to be 21.6% higher. As a consequence affordability has deteriorated significantly to be roughly equal to Perth and second only to Sydney. However this has not deterred population growth, which has been running at over 2% per year for over seven years. This equated to an additional 91,000 people in the year to September 2007, of which over 26,000 were from interstate," says ANZ's April Housing Snapshot.
Andrew Donnelly, CEO of property researcher Braxton Chase, also draws comparisons with Sydney and Perth in describing Brisbane's slowdown, but believes that the future remains bright for the Sunshine State's capital.
"Queensland's surging economic growth continues to bolster the Brisbane market, although evidence of a general slowing in the growth of residential values has become more apparent. A two-tier market similar to that in Sydney and Perth over the past several years has emerged in the inner city market," he says.
"However, any stagnation in residential growth will be relatively temporary. That's because Brisbane has got so many stellar attributes for good residential property investing, including a heightened rate of economic and population growth likely to propel the market well over the long term."
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