Can Brisbane finally deliver long-expected growth?
As the Sydney and Melbourne property markets stole the spotlight last year, many pundits are predicting that 2015 is Brisbane’s turn. So is this the year it’s going to happen?
Talk about being well overdue for a growth spurt. A quick glance at the numbers makes for exciting reading for Queensland investors. Since 2009, dwelling values in Brisbane have only risen by 7.7%, compared to the massive 59.1% increase in Sydney and 52% increase in Melbourne.
And the growth potential is not the only thing that’s attracting investors and first home buyers.
“Yields are substantially higher than what can be found in Sydney and Melbourne, and affordability constraints are much less severe,” says Cameron Kusher of CoreLogic RP Data.
According to recent CoreLogic RP Data Home Value Index results, Brisbane’s gross rental yield for houses currently sits at 4.5% (third highest capital city in Australia) and 5.5% for units (second highest capital city in Australia). And with a median dwelling price of $452,200, this is cheaper than Sydney, Melbourne, Perth
“Of all the major capitals, Brisbane appears to be showing the best fundamentals,” says Kusher.
According to PRDnationwide, Brisbane property is already in high demand, which is evident from the growth in rental prices, the rising number of sales, and falling average days on the market.
“Brisbane is growing at a high rate, and since prices have not yet reached their near peak like Sydney, 2015 will be hotter than ever,” says Diaswati Mardiasmo, PRDnationwide national research manager.
For Terry Ryder, founder of Hotspotting.com.au, the Brisbane metropolitan area is “very solid” at the moment, with one key exception. “The apartment market is the only worry. It is being built to sell to the Asian sector rather than the local market,” says Ryder. “They already have high vacancies and they are about to go higher.”
Where to invest in the regions
If you’re looking to invest in regional Queensland, you can start by crossing some areas off your list. And mining towns are a good place to start, says Todd Hunter, founder and director of wHeregroup Property.
“Regionally, anything through the Surat Basin is suffering majorly at the moment. So there will be negative growth through there,” says Hunter.
In February, another 26 Surat Basin jobs were lost in Dalby at mining business Ostwald Bros. This added to roughly 100 jobs lost at the company near Christmas, as projects are coming to an end.
Hunter believes it should be an especially interesting year for Toowoomba, which has a mining focus but does not just rely on mining, due to its diversified economy.
“Toowoomba is a sort of a hub to that Surat Basin, and so it will be interesting. There are also a lot of townhouse developments going on through that area, and there is just too much oversupply,” he says. “But your mining towns, your Mackays and Gladstones, they won’t perform.”
Hunter is more optimistic about certain regional areas that have more of a tourist focus. “Cairns will go through quite well. We have a bit of a falling dollar and that will certainly help places like Cairns,” he says.
For Ryder, the Sunshine Coast is one of the key standouts outside of Brisbane. “It’s a tourist economy, but that economy now is broadening and strengthening,” Ryder says. “Townsville
is also starting to swing. So you will probably see some growth in the next 12 months. It’s one of Australia’s strongest regional economies.”
First home buyer activity rising
For people looking to buy their first home, Queensland seems to be the destination of choice. First home buyers purchasing property in Queensland are more active than in any other state in the country, besides WA.
In Mortgage Choice’s recent new home approval data, first home buyers in Queensland accounted for almost one in five loans written in February.
Mortgage Choice spokesperson Jessica Darnbrough says Queensland has a much lower median dwelling price than a number of other states, in addition to stamp duty concessions for first home buyers purchasing established properties.
“Our research shows more than 70% of first home buyers who purchased their property within the last two years bought an established dwelling. As such, it isn’t surprising to see first home buyer participation strong in the states that not only offer concessions or grants to those looking to purchase an established dwelling, but those states boasting a lower median dwelling price,” says
SUBURB TO WATCH
Boondall: Northern Brisbane suburb with lots of potential
The northern suburb of Boondall is one that simply has an excellent reputation. Located only 10km from Brisbane’s CBD, this suburb has so much to offer it is literally bursting at the seams. Affordability, proximity and leisure are just some of the words that describe the diversity of the area.
Boondall appeals to a wide demographic. Couples, families, young professionals and retirees are all drawn to this suburb, but for different reasons. First of all, the facilities in the area are excellent. Boondall State School has received numerous awards for educational programs, and the internationally acclaimed St Joseph’s College sits in the south. The suburb is also home to the Brisbane Entertainment Centre, an ice-skating complex, an aquarium and a recreation centre.
The Boondall Wetlands are also a major drawcard. Over 1,000 hectares of protected land provide rich birdlife in the area, making it quite unique. Bikeways and bus routes criss-cross the suburb. Two train stations service the area, and with the Gateway Motorway to the east, travel is hassle-free. The main shopping centre sits along Sandgate Road, and the Toombul Shopping Centre is a five-minute drive away. Surrounding suburbs provide other amenities, such as hospitals, restaurants, cinemas, banks and sports grounds.
While the median unit price is $394,000, many properties are well under this price. Two-bedroom units perfect for couples or young professionals can be found on College Way and Groth Road for under $300,000.