Buyers Market

Opportunity knocks for cashed up investors as Brisbane’s market stays stagnant.

Anyone who’s had half an eye on the Brisbane property market will know that growth has stagnated of late, as evidenced by recent Residex statistics showing negative growth of over 2% for both houses and units in the month of September.

But as listings increase and the market reaches the bottom of the cycle, opportunities are cropping up for investors to negotiate hard over their next purchase. However, given rising interest rates and post-GFC loan-to-value cuts by the major mortgage lenders, securing the funds to purchase that next property is another matter.

“Obviously the past six interest rate increases up until May of this year have been taking effect, and that’s still being felt,” says Real Estate Institute of Queensland managing director Dan Molloy. “There’s also been a sharp increase in the number of properties coming on to the market, and that’s caused the market to stagnate over that last three-month period.

“I think we’re sort of bouncing along the bottom at the moment, and looking for some certainty in terms of what’s going to happen with interest rates,” he adds. “And I think that we’ll probably be in this position until at least the end of the year. A general turnaround in economic activity is what’s required to bring some confidence back.”

Such a turnaround will come hand-in-hand with Queensland’s next round of resource projects, according to business research and forecast company BIS Shrapnel’s recent Australian Housing Outlook 2012-2013.

“The expected pick-up in investment in the next round of resource projects is projected to see mine expansions fully ramped up by 2012/13. Similarly, residential construction will also peak in this year, and these factors combined will drive strong employment and income growth,” says the report. “Subsequently, although interest rates are forecast to rise more sharply during 2012/13 and begin to impact on affordability, a solid median house price growth of 6% is still anticipated to be achieved in Brisbane over the year – although it will be slowing as the year wears on.”

Julian Harrison-Tubb, state manager with WBP Property Group, agrees with Molloy’s prognosis that any turnaround in Brisbane’s property market is unlikely to happen anytime soon. But in the meantime, the dual pressures of increasing stock levels and low demand for property make favourable conditions for anyone looking to invest here.

“I think there is a fair bit of stock available at the moment, so it is a buyer’s market on balance and not such a bad time to buy. The volume of properties for sale is rising, but not the number of transactions,” says Harrison-Tubb.

For anyone with the funds to take on Brisbane’s buyer’s market, Harrison-Tubb tips the inner suburbs as the ones that will be the first to see growth when the recovery takes place. His message is one of sticking to the fundamentals, such as good public transport, when picking out growth hot spots.

“The suburb of Moreton and areas on the train lines are poised to come good when the market returns to normal,” says Harrison-Tubb. “Stick to the basic fundamentals of proximity to transport and the city.”

Molloy, too, points to transport links – current or proposed – as being one of the property investment essentials that investors would be wise to focus on in Brisbane’s current market.

“There is such an emphasis on infrastructure, and particularly transport infrastructure, that those areas of Brisbane that have either been substantially disadvantaged by lack of transport infrastructure, or alternatively are going to receive some improvements around infrastructure – be it busways, railways or roads – will benefit,” he says.

Molloy cites those areas within 5–10km of the CBD with good transport links as ones to watch. He tips areas such as Coorparoo in the inner south and Alderly in the inner north-west as areas likely to see a resurgence.

Further from the CBD, transport links are also key for future growth in Molloy’s eyes. He picks out the 20-kilometre corridor between Ipswich and Springfield as one to watch, being a commutable 45– 60 minute drive from Brisbane’s CBD.