There’s a growing mood of optimism in Brisbane and south-east Queensland, with the state capital’s reconstruction effort and predictions of economic growth bolstering the lucky country’s most unlucky of property markets.
“We’re starting to see the first signs of the $10bn reconstruction activating the Brisbane economy. The Brisbane unemployment rate is very low now, and I think that will have a definite filter through effect to the Gold Coast,” says APM senior economist Andrew Wilson.
“We’re also seeing an improvement in some of those higher level unit sales that were dragging the Gold Coast down.”
He adds that the first homebuyer numbers has also increased in Queensland, albeit at a less impressive rate than in NSW and Victoria. “But there’s still some slight sign of growth in Queensland in that demographic, which tends to be a bit of a lightning rod for what’s happening.”
For the time being, however, Capital 360 Queensland director James Freudigmann notes that key indicators such as price discounting indicate that the Brisbane market is showing signs of bottoming out, which is good news for investors hoping to buy at the bottom and reap the benefits of price rises when the property cycle starts its upturn phase.
He predicts that the market may start to show signs of growth over the next few months, and this is a sentiment shared by Wilson, who predicts that Brisbane should start its recovery – or stabilise at the least – during the first half of next year.
“I don’t think Brisbane’s doing too badly. Its economy’s certainly livening up, and that’s thanks to the reconstruction effort. There’s been no significant hit to house prices in Brisbane; they’ve certainly softened, but nothing like we thought, and I think seller confidence is recovering,” says Wilson.
So what’s underlying all of this positive sentiment? BIS Shrapnel’s senior manager for residential property, Angie Zigomanis, expects that an underlying skills shortage will play its part in boosting population growth, and consequently the underlying demand for property in the state capital, as Australia’s second mining boom continues to take shape.
“So jobs growth increases, income growth increases and migration in particular increases into the state, because it’s fallen off by quite a large amount. And that all feeds through to underlying demand, a rising volume deficiency and pressures in the rental market and on prices.”
Zigomanis warns though that interest rate rises will prevent prices from running away at breakneck speed.
“So there won’t be spectacular growth; four or five per cent per annum over the next three years,” he says.
Further good news to come from the Sunshine State is that the rules surrounding the recently created Queensland Building Boost (QBB) have been tweaked, and it’s now on offer to all Australians.
The boost – a $10,000 grant to buyers who purchase or build a new property in the Queensland for a value less than $600,000 before 31 January – has now been amended in the following ways:
- The construction completion deadline for multi-unit residential projects has been extended from 31 July 2013 to January 31 2015 All projects must commence construction by 31 January 2013.
- National Rental Affordability Scheme (NRAS) projects will be boost eligible
- All Australian residents, rather than just Queensland residents, will be eligible to receive the boost
“By fine-tuning the construction timeframes, and opening up the criteria to NRAS projects and interstate residents, the treasurer has maximised the potential of the QBB to kick-start our construction industry,” says Property Council of Australia Queensland executive director Kathy MacDermot.
And it seems that speculation that this government incentive would trigger developers to throw everything but the kitchen sink at buyers in order to get them to sign on the dotted line hasn’t been unfounded.
Matusik Property Insights director Michael Matusik notes that recent developer moves have included tripling the boost, paying stamp duties for buyers during the boost period, and offering free furniture and rental guarantees.
He warns, however, that when it comes to financing the completed project, it’s not clear whether bank valuers will use the property’s purchase price – or its purchase price minus these developer incentives – when making their final valuation.
In terms of where to buy, property academic and author Peter Koulizos suggests that investors would do well to target houses in the Redcliffe Peninsula, around 40km north-west of the Brisbane CBD. He singles out the suburbs of Redcliffe, Woody Point and Margate.
The area’s distance from the CBD might put off some buyers, but construction is due to start next year on the $1.15bn Moreton Bay Rail Link – which will allow commuters to catch the train from the CBD all the way to Kippa-Ring on the Redcliffe Peninsula.
Combine this with the peninsula’s level of relative affordability – Redcliffe’s median house value of $399,500 is well below the Brisbane mark of $634,000, according to Residex June figures – and the Redcliffe Peninsula could well be one to watch.
“You’re looking at median house prices in each of those suburbs of below $400,000, which is below Brisbane’s median house price,” says Koulizos.
“The train line will be extended to Kippa-Ring, which is next door to Redcliffe, and the thought is that the next stage will be to come to Redcliffe.”
He adds that, with weekly rents for houses in Redcliffe sitting at about the $300 mark ($350 on average, according to Residex), investors will be out of pocket – but this is outweighed in part by the suburb’s affordability factor.
“Sure, it’s going to cost you money from your own pocket, but with this slow market in Brisbane – Brisbane is one of the worst hit property markets in Australia – it just gives people comfort that they don’t have to spend a lot of money,” he says.
Within Brisbane Koulizos tips Woolloongabba units for big things, thanks to its potent combination of infrastructure, proximity to the CBD and recent gentrification.
“For about what the average unit costs in Brisbane, you can get yourself a unit in Woolloongabba, which is only 2km from the city – across the river. It’s known as a hospital precinct, because there are a lot of private and public hospitals there,” says Koulizos.
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