Brisbane may disappoint, but the performance of the regional market looks to be picking up the slack
Queensland’s economy is seeing strong growth, a welcome respite after the fallout from the mining downturn.
“The next three years look decidedly better for property markets across Queensland. To the year ending August 2017, the volume of jobs in the Sunshine State increased by 3.7%, above the 2.6% national average,” reports Simon Pressley, managing director of Propertyology.
With the employment market getting a boost, interstate migration has followed suit: an average of more than 3,000 people entered the state over for the six quarters leading up to August 2017.
“While the state’s southeast often attracts the headlines, central and north Queensland have (arguably) better potential for improvement. Harvey Bay, Toowoomba, Gladstone, Rockhampton, Mackay, Townsville and Cairns perform the role of a capital city to their respective regions,” Pressley adds.
“Each of these cities can look forward to increased demand for local goods and services from improving sectors such as tourism, health, agriculture and mining.”
Oversupply brings Brisbane down
Although population growth is picking up in Queensland, Brisbane’s property market is still expected to underperform.
“There is a significant oversupply of new high-rise, off-the-plan apartments overshadowing the inner-city area and nearby suburbs, with owners now giving significant incentives to attract tenants at a time of rising vacancy rates,” says Michael Yardney, CEO of Metropole Property Strategists.
“Unfortunate buyers of off-the-plan apartments in Brisbane are selling at a considerable loss, particularly if they bought in one of the many high-rise towers in suburbs like Hamilton, Bowen Hills and Fortitude Valley.”
This is the result of the construction boom that produced many apartments over the past five years, causing prices to drop. In fact, resales of off-the-plan units usually result in a 20–25% loss. With unit supply expected to increase further, the situation in inner-city Brisbane is not expected to get better. The rise in vacancy rates has been difficult, especially for landlords, who have resorted to offering heavy incentives just to secure tenants, such as free rent for a month if they sign a 12-month lease.
Nonetheless, development approvals have already fallen by over 50%, which could help balance demand and supply in the near future, especially if new projects are put on hold in the meantime.
“Brisbane’s market is very fragmented and there are still some areas that are performing respectably, with good investment prospects and great places for young families to live cheaply,” Yardney says.
SUBURB TO WATCH
DUTTON PARK: Units struggle in Brisbane suburb
A stone’s throw away from the Brisbane CBD, the suburb of Dutton Park is known for its namesake recreational park, which includes the heritage-listed South Brisbane cemetery.
Houses are performing well in this suburb, with the median price hitting $824,747 following 8.8% growth. This market has reported a consistent positive growth trend for the past five years, and while returns are not high, the potential for growth can sustain investor interest.
On the flip side, the unit market is slipping, with prices falling during the most recent three-year period, even though rental returns are high at an average of 5%.
Dutton Park is home to the Ecosciences Precinct, which is a research facility for the state government and the University of Queensland.
Accessibility: The Eleanor Schonell Bridge connects the University of Queensland’s St Lucia campus to south Brisbane
Heritage: Dutton Park is steeped in history, with sites like the heritage-listed cemetery and Gair Park