Is Queensland finally catching up?
After years in the doldrums, Brisbane’s market is on the rise again, with its booming apartment sector leading the way
Picture if you will a balmy Brisbane night around a BBQ. With tantalising cooking smells in the air and a few glasses of wine in hand, the conversation turns to the topic of the property market in Queensland and, in particular, the capital city.
Not long ago, that conversation would have been pretty negative, says Lachlan Walker from Place Advisory. Local consumer sentiment was sitting low and property investors tended to come from out of state, or even from outside of Australia.
But now there has been a big sea change and Queenlanders are returning to the local market, according to Walker.
“Locals are back buying property
here again,” he says. “So much of the conversation around the BBQ is very positive about Brisbane property these days. This is a good indicator for the state of the market.”
The RP Data-Rismark February Hedonic Home Value Index results show just a 0.6% growth in dwelling values over the last quarter, but anecdotally there is a rising tide of enthusiasm surrounding the market.
Walker says the Brisbane market is in an interesting place at the moment, thanks to the combination of affordable prices and investor opportunities. With the city offering house prices 59% cheaper and apartment prices 47% lower than in Sydney, it seems little wonder that his organisation has seen enquiry levels double recently.
This situation has inevitably prompted increasing interest in the market, and from investors, which should drive the market over the next 18 months to two years.
While Walker estimates that actual sales volumes are still about 50% of where they were when the market was at its last peak, traditionally as enquiries increase they are followed by an increase in sales.
As the Brisbane market has lagged behind other capital city markets for some while, this makes for exciting times, he says. “The increased demand will eventually lead to price growth. I don’t think it will be massive in the next 12 months – maybe 4–5%. But after that it will grow considerably, and might even hit 7–8%.”
Booming apartment sector
Perhaps the most interesting current market trend is the strength of Brisbane’s apartment sector.
Place’s inner-Brisbane apartment market report for the December 2013 quarter recorded the highest level of quarterly unconditional sales since June 2002 – 1,011 transactions were recorded in the final quarter of 2013, which equates to almost 80 off-the-plan sales per week over the period.
Walker says they expect to see a further increase in sales volumes across the residential market.
“We expect to see steady but tight price growth in 2014 as apartment prices begin the ‘catch-up’ to their Sydney and Melbourne counterparts.”
This situation gives weight to recent predictions that Brisbane is the market to watch in 2014 and in the years to come, he adds. Recent research from Colliers International – which projects 2,500 new apartment sales for 2014, a 10% increase on last year – backs this assessment up.
Andrew Roubicek, from Colliers International, says local buyers have started to recognise Brisbane’s current value, especially when compared to Sydney and Melbourne, and take advantage of it.
Affordability, low vacancy rates and attractive yields are also leading growing numbers of interstate buyers to invest in the city.
“With more buyers in the inner Brisbane market than has been experienced for some time,” Roubicek says, “the pent up demand is putting pressure on available stock, particularly in the CBD, which currently has the biggest supply shortage.”
As a result of this trend, prices of new apartments are expected to rise by about 7% over the year across the inner-city area. However, the vacancy rate is likely to remain at around 1% over the same period.
There are a number of Brisbane hotspots that should be of particular interest to investors, according to Roubicek. While Toowong, Cannon Hill and the Brisbane CBD all have a limited supply of new dwellings, Toowong is his top pick.
One of Brisbane’s most tightly held suburbs, Toowong appeals to investors and owner-occupiers due to its proximity to the CBD and access to major infrastructure.
Further, the Toowong Village retail precinct is about to undergo a $50m refurbishment, which will boost the local economy and attract workers to the area.
SUBURB TO WATCH
Populated by established jacaranda trees, which lend their name to the suburb’s famous annual festival, Goodna can trace its origins back to 1823. As a result, it is home to a number of heritage-listed sites and the Goodna State School dates back to 1870.
This suburb also boasts a range of more contemporary attractions. About 20km from the Brisbane CBD, it sits at the midpoint between the CBDs of Brisbane and Ipswich
This contributed to the state government designating it as both a transport-oriented development centre and an economic activity centre. Related capital work and infrastructure development continue to benefit the area.
With a population of around 8,000, Goodna is one of the biggest suburbs in the Ipswich area. It has a wide range of amenities and services, including good public transport, a shopping centre, schools and recreational facilities.
The north of the suburb sits on the banks of the Brisbane River, while a host of family-friendly parks are scattered throughout the rest of Goodna. Quality low-set brick-and-tile homes dominate the property market.
Price booms in Brisbane and Ipswich and premium developments in the neighbouring suburbs of Brookwater and Springfield Lakes mean Goodna is a sound opportunity, according to a representative of Ray White Goodna. “Local investment and the suburb’s immediate access to road and rail transport underpin the future capital growth of the area.”