Are you considering investing in the Brisbane property market?
I know Brisbane has been in the headlines recently as the best place to invest over the next few years.
But how many times have we heard that before?
What makes this time different and why would you invest in Brisbane anyway?
Having been investing and buying for our clients for close to 15 years, I wanted to share with you my insights on “why Brisbane?”
And I’d like to explain why this time is different and why the numbers are starting to make sense.
I also want to highlight what we see at ground level, to give you a greater level of comfort if you are looking to buy an investment property in Brisbane.
To be frank, overall the last decade has not delivered the same returns for many Brisbane property investors that they could have achieved elsewhere, but the next decade is looking very positive.
Here are my thoughts;
Define Brisbane
I have heard Brisbane described as the area anywhere from Gold Coast to the Sunshine Coast and out to Toowoomba.
While that is certainly South-East Queensland, it is not Brisbane.
As an investor you must firstly understand an important concept - Brisbane does not have the urban sprawl or the maturity of a Sydney or Melbourne market.
The guide we use is an imaginary ring 10-12km from the Brisbane CBD.
Some suggest the outer areas of south-east Queensland are up to 40 years behind our bigger, more advanced capital cities.
So, there will be growth…… eventually, but can you afford to wait that long?
However The inner 10 – 12km ring around the Brisbane CBD is likely only two decades behind.
This means, buying in the right pockets of Brisbane now, could potentially be the equivalent of buying in a similar suburb in Sydney or Melbourne 20 years ago.
If only we could have that opportunity all over again – buying in those capital cities in the year 2000
1. One City Council
One of the major benefits of investing in Brisbane is that fact that you are bound by only one city council.
This means, many processes are efficient and transparent, without all the hold ups and indecision that take place from multiple decision makers.
I believe this has allowed Brisbane to be proactive in many aspects, especially from an infrastructure perspective.
Take for example our tunnel networks across the city.
Initially, there were questions raised about these projects being premature, but now it is viewed as a more positive outcome.
In Sydney and Melbourne, they are only just building tunnel networks more recently, which has been a more reactive measure.
Moving forward, it is the bigger infrastructure projects that will lead the way for Brisbane and create a huge amount of jobs in the process.
The two big ticket items in the pipeline are the Cross-River Rail project and Brisbane Metro.
Cross-River rail is an exciting subway style piece of infrastructure linking a number of inner-city southside suburbs and precincts to the CBD and beyond and now under construction.
Brisbane Metro links the inner city to our middle ring southern suburbs by a dedicated bus system.
No longer will commuters be stuck in general traffic, but have the luxury of a modern, air-conditioned fleet of vehicles that run regularly and on time.
2. Affordability/Opportunity
The price gap between our biggest capitals and Brisbane are now at an all-time high.
So much so, that if you sold your home in Sydney at the median, you could probably afford to buy two properties for the same price or buy one home and be potentially debt free, plus change!
At some point in time this significant price gap – the difference in affordability has to be seen as an opportunity by many south of the border.
For the cost of an average home in Brisbane you can buy within 10km of the Brisbane CBD, while in Sydney and Melbourne you would be looking 30km to 40km away for a house.
The cost of living is also becoming a major issue in our larger capitals.
The ability to potentially earn an extra $100k in a bigger city soon loses its appeal once you are forced to either stump up double for a house or consider living much further out.
This will lead to next generation Brisbane-ites staying put and may also be too big of an attraction for young professionals around the country.
Remember for the next generation of home buyers it is all about instant gratification and they tend to prefer to live closer to where the action is - jobs, lifestyle and amenities.
In the old Brisbane, these jobs may not have been on offer due to floods and downturns, but those opportunities are starting to present themselves.
Adding to that, Brisbane seems like the place to be after recent lockdowns and the working from afar phenomenon ramping up.
The planets are starting to align.
3. Lifestyle
The days of Brisbane being a big country town will become a thing of the past as we head into the new decade.
The energy in the city and the lifestyle on offer is rapidly changing.
This will be headlined by the completion of the Queens Wharf Precinct which will alone see a net increase of 11,500 jobs.
It will see 5 new hotels, 50 restaurants, bars and cafes and there will also be 3 residential towers linked to a world class Casino.
It will also include a pedestrian bridge across to South Brisbane and beyond.
It has already triggered a domino effect of new precincts around the CBD from the Howard Smith wharves underneath the iconic Story Bridge, to the redevelopment of Eagle Street Pier.
With a buzz around the city and easy access to these lifestyle precincts, Brisbane will see a new lease of life and change forever.
This will draw new arrivals from interstate and visitors from overseas who may just be tempted to stay for a while longer to be part of this new world city.
4. Proximity to Asia
Is Brisbane about to become the playground for China?
I posed this question in a previous blog as a result of the opening of the second runway at Brisbane Airport.
There is a huge amount of interest and support from regions like China and Taiwan in Brisbane, with up to six local airlines committing to the new runway.
These are airlines that have never previously flown to Brisbane.
This is important for several reasons but predominantly for business, tourism and education opportunities which will all contribute to the local economy.
Now residents in these huge Asian countries will have the ability to do business, travel and be educated in Brisbane, something not previously on offer.
Incredibly exciting, considering we are the closest capital out of the big three to our Asian neighbours.
Brisbane can only benefit from more business and tourism and certainly our universities and tertiary institutions will be vying for a slice of the international student pie form Sydney and Melbourne.
We find these students often stay put on working Visas once they are suitably qualified to contribute to the local community and economy.
Asia will play a huge role in shaping Brisbane moving forward.
5. Undersupplied
A number of these points may push the “its time” factor but what does the data suggest?
Probably the most important aspect of any investment is to understand the basics of Supply and Demand.
At our Seminar earlier in the year, Dr Andrew Wilson provided a snapshot of the Brisbane property market.
Dr Wilson suggests that we are undersupplied by around 80 properties per week and projected household completions continuing a downward trajectory.
While fewer homes are being built, demand is continuing to rise as bigger projects like the Brisbane Airport Precinct, Queens Wharf precinct and a host of infrastructure projects create jobs.
This mismatch between Supply and Demand will certainly play out in the early part of this decade and to some extent we are already seeing the shift.
In Conclusion
Brisbane is really starting to transition and emerge as a new world city, following a decade of floods and downturns and a sever lack of jobs growth.
A proactive and beneficial local council has provided more efficiency and certainty for residents and business with positive infrastructure projects.
The gap between Brisbane property prices and the bigger capitals is at all-time highs and the affordability factor will start to play on people’s minds.
With more working flexibility and a new lease of life, Brisbane will start to shake off the country town feel.
It will be led by the huge lifestyle precincts in the CBD which will create many jobs and opportunities and a new, modern vibe in the inner city.
Asia will also be a key part of Brisbane’s future.
Being the closest major capital city will be a huge bonus for the river city with access to more business, tourism and education opportunities not previously on offer.
Attraction from interstate and eventually overseas will continue to provide strong demand for housing at a time when we are not building enough of the right type of properties.
While there certainly are enough reasons to suggest it is time, the numbers are finally starting to back it up.
The opportunity to invest in a Sydney or a Melbourne equivalent 20 years ago may have just presented itself again.
This is why you should consider Brisbane for your next investment.
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Brett Warren is a director of Metropole Properties in Brisbane and uses his 18 plus years property investment experience and economics education to advise clients how to build their portfolios.
He is a regular commentator for Michael Yardney's Property Update.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
