Brisbane's housing market and economy are showing signs of improvement from a period of lull in the past decade; however, several risks could derail the projected growth in the city, according to the latest market review by Herron Todd White (HTW) Residential.
After suffering from plummeting net interstate migration, Brisbane managed to attract more Australians over the past few years.
"It's a combination of affordability or southern retirees seeking lifestyle to date, although further improvement in job numbers would help fill out the demographics of new Queensland residents arriving from over the border," HTW Residential said.
Upcoming infrastructure developments, such as the Cross River Rail and Brisbane Metro, are also expected to set a solid foundation for the housing market for the next decade.
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Another good sign is the absorption of the unit oversupply during the 2015-2017 period.
"Things have been looking up of late and with substance. This solid groundwork for a positive 2020, HTW Residential said.
A separate market forecast by Domain said Brisbane house prices are likely to rise over the $600,000-mark by the end of the year. Median prices for units are also expected to increase by 6% this year.
Downside risks in Brisbane
However, there are several factors that could dampen any prospects of a price increase, including the uncertainty surrounding the financial landscape. However, if more credit is freed up this year, demand for home loans could actually increase.
The tenancy regulations will also impact the prices in the city.
"We'll avoid taking a political position on this for now, but if the proposed laws make it through parliament, it appears landlord's property rights will be diminished. Our mathematical mind does compel us to think removing some of an owner's control over their investment property will affect the values," HTW Residential said.
One potential change is the abolishment of landlords' right not to renew a tenancy agreement at the end of the deal's term. This would allow tenants to remain in the property indefinitely unless the landlord can establish a legal reason to end the agreement as prescribed by the law.
Other proposed measures include nixing landlords' rights to refuse pets and allowing tenants to modify the property without the consent from the owners.
Despite these downside risks, HTW Residential said "sustained gains" are expected this year.
Where to invest?
HTW Residential said the best places to invest in are the areas close to CBD. In terms of property type, detached housing is the way to go.
"The basics indicate that buying a detached home within reasonable proximity of the city as best you can afford will be the surest approach this year. The flex points are you can travel further out but be nearby to public transport options, major services, and employment centres," HTW Residential said.
For more affordable homes, buyers should consider the likes of Carseldine, Fitzgibbon, Taigum, Acacia Ridge, Runcorn, and Banyo. These areas offer traditional homes with lots of spaces.
"These suburbs may not be for everyone, but they do offer reasonable housing with some long-term upside potential," HTW Residential said.
Investors and buyers with deeper pockets should continue looking at suburbs like Chapel Hill, Kenmore, Stafford Heights, Chermside, Holland Park, Carina Heights, and Moorooka.