Houses are the stars of the Brisbane property market
Even though house prices in Brisbane saw a decline during the March quarter, the housing market continues to be a much better option than units in this capital city
Brisbane appears to be joining the list of Australian capitals experiencing a decline in their property markets.
According to the Domain House Price Report, house prices dropped during March quarter 2016 for the first time since the September 2014 quarter. Meanwhile, unit prices continued to decrease as they had throughout the previous year. The housing market reported a 4.1% increase in prices over 12 months, whereas unit prices fell by 3.2%.
“Brisbane has now recorded seven consecutive quarters of falling unit prices with the recent apartment building boom having pushed supply ahead of demand,” says Domain Group’s chief economist Andrew Wilson. “The local house market has also failed to build on a solid finish to
2015, with the median house price falling to $512,809.”
Wilson describes Brisbane’s problems as “structural”, citing the poor economy. Significantly low migration rates are also having a negative effect on the Southeast Queensland property market. House prices are experiencing the “flow-on impact” of increasing unemployment rates, especially as Brisbane is a mining capital, says REA Group chief economist Nerida Conisbee.
However, REIA president Neville Sanders says Queensland has reported “the largest increase of 0.7%” in terms of the number of owner-occupied finance commitments. Moreover, a market update by Eliza Owen, market analyst at OnTheHouse.com.au, reports that unit sales in Brisbane increased by over 12% in the past 12 months, as did rental rates. By contrast, rental rates for houses remained steady, although sales also rose by 11.63%.
In both markets, rental yields are quite strong. This is likely because of Brisbane’s good reputation – in March, it was regarded as “the most stable city in Australia”, wrote Olivia Lambert in a piece published on News.com.au. In the same article, REIQ CEO Antonia Mercorella commented that Brisbane’s edge over capitals like Sydney and Melbourne was its comparatively low house prices. The influx of units is also considered by Mercorella to be a positive, as they offers a new lifestyle to the locals.
The presence of offshore buyers, especially the Chinese, in the apartment market could also help turn Queensland’s situation around. Conisbee says property is a “preferred investment class” for these investors. This explains the rise in the number of apartments as the number of houses decreases.
The city of Logan is currently reporting moderate price growth despite a period of underperformance likely due to the building boom, Wilson notes. Moreover, houses in the suburb of Cabarlah in Toowoomba saw significant growth at a rate of 49% over the past 12 months, following 69% growth over the past three years and 48% growth over the previous five years. Simone Files, property sales consultant at Toowoomba City Realty, expects consistent house sales here in the near future as retirees flock to the area in the hope of saving on the maintenance costs of larger homes.
“Several large infrastructure projects will significantly increase the number of jobs for locals in the region,” Files notes. “Cabarlah will see an increase in the number of sales, as relocating families will look to embrace the lifestyle change that is on offer only 15km from Toowoomba’s CBD. The opening of the Highfields State Secondary College in 2015 has also contributed to this.”
With the expectation that Toowoomba’s population will triple over the next two decades, more than 500 lots with areas of 600–800sqm are set for release by the Avenues of Highfields estate, located on the border of Cabarlah and neighbouring Highfields. “The best opportunity for growth will be in the larger allotments that can be land banked for the moment and split in the years to come,” Files says.
Meanwhile, one-bedroom apartments in Wynnum West provide considerable yields as well, according to Conisbee.
“The current property market in Wynnum West is quite diverse as the area is also quite large,” says Nina Adams, principal at Century21 Adams & Costello. “We have entry-level homes in the area from $400,000 and executive homes to $900,000. The area is being rebuilt along the hilltop ridge, which offers views to the city and the bay. Some of the highest blocks in the area, such as Sibley Road, have had new homes built. This in turn has created some exclusive enclaves within the area, which is ideally situated close to transport routes (trains), major shopping precincts, waterfront and major arterial roads leading to the airport, Gold Coast and Sunshine Coast.”
Furthermore, the unit market in Wongaling Beach recorded 47% growth over the past year following a three-year growth rate of 26%. This market has the third-highest average annual growth rate in Queensland at 20.1%. “Brisbane has been slow, but it is starting to improve,” Conisbee says.
SUBURB TO WATCH
North Maclean: Rural suburb falters
North Maclean sits on the Logan River and is bookended by Greenbank and Jimboomba. It is fairly affordable, given that prices dropped slightly to below the Queensland average over the past year. Nonetheless, it has a low vacancy rate of 1.2% and the rental yield remains strong at 4.9%.
Residents are mainly middle-aged, and families are also attracted to this area because of its proximity to several schools in nearby suburbs, such as Jimboomba and Logan Village.
The Brisbane CBD is just half an hour away by car via National Route 13 and the M3, and commuters also have access to bus services to the city. This makes North Maclean an excellent choice for those who want to live in the suburb and work in the city.
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