The Sunshine State is on track for a strong performance in 2019, driven by economic growth and rising demand'
A few years ago, Brisbane was in a difficult position as a result of the mining downturn. However, it is set to become one of the best recovery stories in the national property market.
According to CoreLogic’s Hedonic Home Value Index for February 2019, where Sydney has fallen, Brisbane has picked up, reporting the best subregion performance next to Hobart and Canberra.
Another strong indicator of Brisbane’s rise is that the number of premium suburbs in this city has increased – in fact, the list of milliondollar suburbs in Queensland overall has grown each year since 2013. In the 12 months to January 2019, the figure went from 34 suburbs to 38. Brisbane alone claimed 26 of those premium suburbs.
Even though concerns about oversupply have not abated fully, it seems safe to say the Sunshine State is poised to have a good 2019.
“Queensland is relatively affordable; population growth is strengthening and regions are benefiting from rising tourism,” says Geof Snell, principal property economist at BIS Oxford Economics.
“Queensland’s economy is accelerating in line with increasing levels of migration, growth in non-mining industries and rising exports. The state will become a driver of the national economy from this year.”
Oversupply in pockets of state
Investors do still have to be careful when they buy in Queensland, as there continues to be a strong influx of new apartments in some areas.
“Queensland does have a less pronounced oversupply and may rebound a little earlier, perhaps sometime in 2021. Nonetheless, it is likely that the unit markets in Sydney, Melbourne and Brisbane will see a continued slide in the year ahead, with those markets facing downward price pressure due to ongoing investor retreat,” Snell says.
As a result, house prices in Brisbane could also take a tumble in the next year.
CoreLogic data suggest that first home buyer commitments in Brisbane are falling slightly as well. Brisbane recorded its lowest number of commitments since October 2015, at 1,586 – after a decline of 11.1% over November to December 2018. First home buyer loans comprised only 24.3% of total new owner-occupier lending – a value not seen since February 2017.
SUBURB TO WATCH
ALGESTER: Prices slip in city-fringe suburb
The year to January 2019 was not altogether positive for the suburb of Algester, which saw a decline in property prices.
Situated on the outer fringe of Brisbane, Algester has an affordable unit market, with a median value of less than $350,000. The average rental return is also fairly strong at 5.5%. However, unit values in that period fell by 1.7% after positive growth in 2016 and 2014. The house market saw a slightly bigger drop, as prices slipped by 2.3% to a median of $489,712.
While the rental rate for houses remained unchanged at $430 in the 12 months to November 2018, unit rents plummeted by 8.6% to $320.
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