Brisbane’s property market is going through something of a “wait and see” period, according to Australian Property Monitors senior economist Andrew Wilson. No doubt, the Sunshine State’s impending mining boom will ultimately filter through to the state capital’s housing sector, but for the time being Brisbane’s turbulent start to the year has seen modest falls in property values.
“We’ve seen falls this year, but not massive ones. The impact of the floods, and the ensuing quiet market, haven’t been too dramatic,” says Wilson. “Still, Brisbane’s in the doldrums. It suffered from the high Australian dollar having a negative impact on tourist regions and that’s drifted into the wider Queensland economy.”
He predicts that the Brisbane property market will start to see signs of recovery as the year progresses, but adds that investors are still waiting to see what effect the city’s massive flood reconstruction effort will have on the property scene.
“We project Brisbane will see no growth by the end of the year, but it’s bumping along the bottom now,” he says. “Even so, Brisbane’s a little like Perth – once it starts to grow, it will snowball.”
Brisbane remains lukewarm
For the time being, however, the Brisbane property market remains lukewarm across the board, according to Herron Todd White in its Month in Review report, with discounted sales not being restricted to flooded areas.
“Agents across the board are reporting a general sense of pessimism. Property must be very carefully priced in order to get potential buyers through the door and then all offers are to be taken seriously,” says the report.
Herron Todd White tips the outer suburbs of Caboolture, Morayfield, Burpengary and Deception Bay, as well as the slightly more central suburb of Banyo as the best areas to pick up affordable properties.
“Another option is to look at some of the more established suburbs closer to the CBD. Kenmore in Brisbane’s western suburbs has sales around $450,000 that appear to offer good buying options,” says the report.
“Property in Kenmore and surrounds at below half a million are certainly piquing plenty of interest for the upwardly mobile looking to get a foot in.”
Buyer activity is certainly at its highest in inner Brisbane’s sub-$500,000 market, notes CBRE regional director of residential mortgage valuations Tom Edwards.
Edwards warns, however, that conditions have deteriorated for entry-level properties in fringe suburbs that had previously benefited from the First Home Owner Grant.
“Increasing interest rates in particular have impacted on this segment of the market and lower sales volumes have created an oversupply of listed properties in these fringe areas,” Edwards says.
Vacancy rates tighten
The good news for investors in the state capital is that competition for rental properties has picked up during the first quarter of the year. According to the results of the Real Estate Institute of Queensland (REIQ) March rental survey, the vacancy rate for the Brisbane City local government area (LGA) tightened by 0.8% during the quarter, dropping from 2.6% in September to 1.8% in March.
These figures are partly affected by the floods, says REIQ chair Pamela Bennett, but the temporary effect that January’s natural disaster had on the rental market was mainly confined to flood-affected areas.
“The rental market is starting to be affected by the subdued property market,” she explains. “Given the low number of first homebuyers and investors, there is more demand and less supply in the rental market.