Growth is limited due to high unit stock, but low prices maintain the appeal of Brisbane and the Sunshine Coast to Sydneysiders
Significant levels of unit supply have been both a boon and a bane to Brisbane thus far.
“Brisbane is continuing to face challenges due to increases in supply, particularly in apartment stock,” says Charles Tarbey, chairman and owner of Century 21 Australasia.
“[However,] whilst growth has been more subdued, with Brisbane recording a 0.3% lift in dwelling values over the month of May, it is likely that the market will continue to attract interest from the southern states.”
Tarbey notes that median house prices in Sydney are more than double those of Brisbane, “so the Brisbane capital city market, as well as Sunshine Coast areas, will likely remain appealing due to more affordable price tags with accompanying lifestyle benefits on offer.”
Nerida Conisbee, chief economist at REA Group, adds that tenants in Brisbane are developing a taste for apartment living since such properties are considerably cheaper than houses; however, this has not translated into heightened rental demand as a result of new developments pushing too much supply.
Thus, older second-hand units could be an option for buyers on a budget – these types of properties have become bargains in this market, with the influx of new apartment stock pushing their prices down even more.
For investors desiring to get a foot in the door of premium suburbs, renovation may be a smart move. To avoid overcapitalising, Herron Todd White recommends looking into near-city suburbs offering limited stock, rising values and established precincts, as well as proximity to the CBD and school catchments.
“There are capital gains already underway in a number of these locations and you want to be the first buying into the market, not the last,” states the June 2017 Month in Review report.
That said, Jane Slack-Smith, director of Investors Choice Mortgages, doesn’t see Brisbane as a good long-term investment.
“Brisbane really has not performed as it should have in the last few years. The population growth has also been lacklustre, and with the downturn associated with the major infrastructure projects in Gladstone and the mining boom coming to a quick halt, the state has not enjoyed the growth that was anticipated during this last cycle,” she warns.
While the Commonwealth Games are expected to spur growth in the market, Slack-Smith believes this event will only bring short-term benefits.
“It is more likely that the very experienced investors who might trade in and out of this market quickly will be the ones making money,” she says.
SUBURB TO WATCH
Central suburb shows tempered growth
As a suburb close to the Brisbane CBD, Carina Heights could be experiencing the effects of apartment oversupply.
Unit prices slipped by 3% in the past year following a five-year period of positive growth, bringing the median value down to $450,574. However, investors may still be attracted to this market due to the rather significant yield of 5%.
By contrast, the house market has sustained growth, with a 4.3% increase in prices. This could be the result of Brisbane residents still needing to adjust to the idea of apartment living.
Carina Heights is bordered by suburbs like Carina, Camp Hill and Carindale, which offer easy access to amenities.