An improving economy and rising interstate migration rates have put Brisbane in a solid spot as affordability continues to drive demand
Queensland’s economy is on the up, and it’s inspiring interstate migration as buyers seek to capitalise on the affordable housing and stabilising job market in this region.
“The established housing market, townhouses and new land are very strong around Brisbane,” explains Matt Lewison, director at OpenCorp.
“There is a shortage of developable land for new housing within 30km of the Brisbane CBD. Still, it’s lots cheaper than Melbourne and Sydney and very strong on the affordability index.”
The northern and eastern suburbs are doing very well, with townhouses in close proximity to the CBD recording low vacancies. Thus Lewison expects growth to pick up in this area as residents grow more confident about the state’s economic prospects.
The positivity extends into the Brisbane-Gold Coast corridor, where sales levels are boosted by the strength of the Gold Coast’s economy. However, employment rates have not yet caught up despite the rising economy, and wage growth remains low.
Moreover, Brisbane is still weathering a case of unit oversupply caused by excessive construction – as a result, the vacancy rate of rental properties is quite high. Fortitude Valley and Woolloongabba in particular are potential problem areas. Developers are seeing a bottleneck of completed properties as off-the-plan units are hard to sell.
“The high construction costs, which resulted from the 2015/16 boom in apartment and commercial construction, have caused many developers to ‘mothball’ their projects, so there is a lot less stock coming through the pipeline than previously predicted. This should see a correction in supply over the next 12 to 24 months,” Lewison says.
Buy smart in Brisbane
Brisbane will always be attractive to prospective investors because of its low prices and significant rental yields. However, given the supply and other residual economic issues, it’s vital to approach property buying in Brisbane with caution.
“There are markets within markets, and there is still opportunity for growth if you buy well in Brisbane,” says Jane Slack-Smith, director of Investors Choice Mortgages.
“Country Queensland outperformed all states with the number of regional towns available to invest in that met these criteria: median values between $150,000 and $600,000, a minimum of 5% per annum rental yield, and a minimum of 6% per annum growth in the next eight years.”
Upon conducting research using Residex prediction data, Slack-Smith also found that Southeast Queensland is likely to be the focus of interstate migrants from the southern states, therefore investors should keep an eye on this area.
SUBURB TO WATCH
MOUNTAIN CREEK: Sun shines on waterside suburb
On the Sunshine Coast, the suburb of Mountain Creek is following the boom in the region and recording a boost in property values.
Houses in particular have surged by 7.1%. Rental returns are also favourable at 4.7%. The growth in unit values has been gentler, but yields are very strong.
The suburb is named for the nearby creek, which flows from the southern part of Buderim. It is part of the Buderim urban centre, and home to Mountain Creek State High School. An abundance of conveniences, like a hospital, walking paths, parks and shopping centres, can be found here as well – it is an ideal recreation spot.
Recreation: Mountain Creek will appeal to both nature lovers and shoppers as it’s close to beaches as well as malls
Yield: Investors can earn high returns from both house and unit rentals