Brisbane’s property market had a bumper start to 2022, even while markets in Sydney and Melbourne were beginning to cool – and only now has price growth shown signs of slowing.
Thanks to historically low interest rates, government incentives, pandemic-induced interstate migration and historic levels of demand from buyers over the past two years, prices have surged across most of the country.
Data shows that Australia’s overall property prices beat records in the final quarter of 2021, with the national median house price surpassing $1 million for the first time.
That’s a 25.7% year-on-year surge for house prices and a 7.7% year-on-year increase for units.
For Brisbane, price growth shot up at the fastest rate of any capital city thanks to increased interstate migration and strong demand.
Domain data shows that Melbourne’s median property price currently sits at $831,346 versus $629,499 just 12 months ago.
As you’d imagine, over the past five years, the price difference is even more pronounced.
And there are some Brisbane suburbs where price growth was particularly exceptional.
For example, Sunshine Beach in Noosa saw a whopping 191.67% increase in median prices over the past 5 years - the highest of any suburb across the country - to a new $3.5 million median.
The similarly named Sunrise Beach, also in Noosa, also had an impressive 138.1% increase to $1.75 million, from just $735,000 in 2017.
And it’s not just Noosa suburbs where prices have hiked - several suburbs in the Sunshine Coast and Gold Coast regions also saw bumper price increases.
But not every suburb follows the same trend…
While Brisbane’s prices have trended higher there are some exceptions, even amid a property boom.
Data by Domain found that there are a raft of suburbs in Queensland where prices are actually cheaper now than what they were in 2017 – significantly less in some areas.
Interestingly, like in New South Wales and Victoria all of the 16 suburbs are in Brisbane, and all are units.
But unlike in Victoria - where the affected suburbs are concentrated in the inner urban region of Melbourne - these Brisbane suburbs are spread throughout the city.
Leafy inner-city favourites like Windsor, Indooroopilly, Bulimba and Wooloowin are all more affordable than they were in 2017, thanks to an oversupply of units that the city is well on its way to absorbing.
The median unit price in Windsor in Brisbane North is $430,000 today, which is 14.9% lower than in 2017.
Median unit prices in Beenleigh in Bayside South also fell 12.7% over the 5-year period to $240,000.
There were 6 suburbs in Brisbane West which made Domain’s list of Queensland suburbs where property prices are cheaper now than they were 5 years ago.
Such as Milton where median unit prices are $460,000, which is 9.8% lower than 5 years ago.
Then there is Spring Hill and Chermside in Brisbane North where median unit prices have fallen 6.4% and 5.6% over the 5-year period.
And there is also one suburb in Brisbane East that made the list - prices in Bulimba have fallen 5.2% to $635,000.
“It’s the fastest-growing capital city unit market over the first three months of 2022, jumping 3.1%,” Dr. Nicola Powell, chief of research and economics at Domain, said.
“This is the property boom Brisbane has long been waiting for, providing the biggest upswing in unit prices in 14 years.”
Warning: Don’t be fooled by low prices
While it might be tempting to be attracted to the low price growth in some of these suburbs, it’s important to remember that low median house prices alone aren’t enough alone to warrant a good investment opportunity.
‘Cheap’ property will always be ‘cheap’ so don’t get lured into thinking you’re getting a bargain.
Also, don’t expect investment-grade returns from secondary locations and properties.
Of course, we all know by now that location will do about 80% of the heavy lifting of a property’s capital growth.
And that’s why it’s important to buy your investment property in a suburb that is dominated by more homeowners, rather than a suburb where tenants predominate.
Powell agrees that while the opportunity to buy for less than 2017 prices is very real, buyers need to do their homework before leaping in.
“If you’re looking to purchase a unit – and many are because we’ve seen houses over-perform – it always goes back to what is the quality and point of difference in the place you’re purchasing? And how broad is that buyer pool going to be when you go to sell it down the track?” she said.
“It’s important to buy a property that’s going to enable you to buy in the future and upgrade.
“If you’re looking to purchase a unit in these areas where prices are still below that of 2017 levels, make sure you understand the developer you’re buying from, and what’s the point of difference between your place and others.”
Our advice at Metropole is even firmer than that – don’t fight the big trends – if these apartments could not perform during a boom, why would you expect them to perform well in the long term?
Just avoid them!
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.