Brisbane’s road ahead
A number of competing forces in the Queensland economy and property market make 2014 a hard year to call, but forecasts are leaning more to this year being a positive one – and here’s why
In 2013, Australia’s two largest cities, Sydney and Melbourne, saw the biggest response from a lower interest rate environment. 2014 looks likely to see the country’s third largest city, Brisbane, caught in a game of catch up.
Australian Property Monitors senior economist Andrew Wilson says that property prices in the city have plenty of room to grow and he expects Brisbane to be one of the year’s strongest performing markets.
“Factors are lining in favour of strong price growth prospects for Brisbane property prices. We’re not talking double figures here, but Brisbane is a standout in terms of house price growth next year,” he says.
Equally optimistic is BIS Shrapnel’s head of residential research Angie Zigomanis. “[Brisbane] is probably where we saw Perth
two years ago,” Zigomanis says, adding that pent up demand pressures mean it is only a matter of time before more residents start buying property
For Zigomanis, the only potential worry point for the market is the current economy, which remains ‘soft’.
“Overall, the Queensland economy is still weak,” he says. “Unemployment rates are higher in Brisbane and Queensland than they are elsewhere on the eastern seaboard.”
Zigomanis adds that job losses resulting from Premier Campbell Newman’s fiscal consolidation measures have made people worry about their employment prospects.
“People are wary… Until you start seeing concrete signs that things have bottomed out and they are starting to improve, people won’t head back into the market.”
While current economic conditions could be better, other factors could see confidence lifting in the months ahead, which could help to balance out concerns over Queensland’s employment market.
The falling value of the Australian dollar is helping the ailing international tourism industry, with Queensland areas such as the Gold Coast, Cairns and the Whitsundays Coast expected to draw the most visitors.
A lower dollar could also stimulate agricultural exports – a sector that hasn’t been all that competitive under a high Australian dollar.
Further economic benefits could come from the mining sector. Despite the much publicized winding down of the mining construction boom, select areas are continuing to see construction activity.
“We’re a long way from calling the mining boom dead in Queensland,” says Australian Property Monitor’s Andrew Wilson.
Wilson adds that current soft economic conditions in Brisbane could paint a wrong picture of how the state economy will perform in 2014. He sees economic recovery being strong.
“All the boxes are being ticked for [improvement in] the Queensland economy at the moment and this will stimulate a recovery in house price growth. Over next year the city will start to get over its previous price peaks,” Wilson says.
Units vs. houses in 2014
Price growth in the unit market should track lower than in the house market over 2014, according to Residex founder John Edwards.
Edwards says that because developers prefer building blocks of units, the current supply of apartments is sufficient enough to ensure price growth in the unit market will remain relatively low compared to the house and land market.
“Sales activity also confirms that the market is not overheating and we are not entering boom times… Total sales activity is still lower than it was in 1999,” Edwards says.
Residex models suggest overall property price growth in 2014 will be similar to what was seen in 2013, but will moderate once interest rates increase to more normal levels.
Spotlight on: Most popular suburbs for buyers
A cluster of suburbs in Brisbane’s south-east are among the most popular areas for buyers to purchase at the moment – evidenced by the time it is taking listed properties to sell.
Neighbouring suburbs Carina Heights, Holland Park and Carindale have not only had a high level of sales activity, these sales have occurred extremely quickly. In the case of detached houses in Carina Heights, the average listing time for a property – just two days over a month – represents a fast moving market, especially when considering that the average listing period for a property in Australia is between 80 and 100 days.
The speed at which houses are selling in Carina Heights is being superseded only by units in Strathpine in Moreton Bay. Here, affordability is a strong driver of the market, with the median unit price among the lowest in the Greater Brisbane area.
Proof that the Sunshine Coast market is having the return to life that many expected can be seen in Bokarina. The median price of houses is fairly high for the Sunshine Coast, $474,500, but this isn’t stop the buying market from lapping up anything that comes onto the market. Six weeks is all it is taking for most houses to sell.
The fastest selling suburb within inner-Brisbane is Fairfield, just 4km from the CBD.
Suburb to watch: Holland Park
If you’re an investor on the hunt for high-growth property within 10km of the Brisbane CBD, you might find Holland Park tempting, if not downright irresistible. The suburb ticks off a number of boxes for an investment hotspot and could very well be a great place to buy – if you get there quick.
The suburb is within an older more established area, south of central Brisbane, and is well connected to public transport as a result. Its local amenities are excellent, with plenty of schools and medical facilities in the area, and there is a nearby shopping centre and retail district to boot.
With a median unit price just over $400,000, the suburb offers good value and it is clear that buyers are starting to recognise this. Properties (houses) are sitting on the market for an average of just 38 days, which is among the fastest selling times in the state.
Perhaps the most significant statistic for the suburb, however, is that the amount of properties that are up for sale (as of April) constitutes just 0.5% of all properties within the suburb. This means that apart from being an in demand suburb, Holland Park is also a suburb that is hard to get into. There’s an imbalance between the number of people who want to buy there and the number of owners willing to sell. This is a strong sign that prices may increase rapidly in the short-term future.