The month in review: Brisbane
By Herron Todd White
Brisbane is ready for 2018.
It feels like this should be our year, with any number of observers convinced a great boom of capital growth is certain to hit. It’s been always the bridesmaid, never the bride for our city’s real estate since 2010 as we’ve watched the southern capitals enjoy value growth at a staggering pace.
Of course, Brisbane’s market is more nuanced than this. A scatter-gun approach to property investing in our town – buying whatever, wherever – won’t automatically result in a capital gains bulls eye. Purchasers need to consider all the relevant data before they buy this year if the plan is to own a winning prospect in this property market.
We believe that, on the whole, Brisbane property will see 2018 play out in a similar fashion to 2017. We are a traditionally steady market with few surprises.
You can be certain that detached housing within the inner ring will continue to find favour with buyers. How could it not? Supply is limited and demand for quality homes shows no signs of abating. This is the circle that performed best in 2017. Most owners within five to ten kilometres of the CBD appeared eager to hold tight. Many chose to upgrade their homes and enjoy their plumb positions within the confines of our city’s most desired markets.
The really interesting value moves this year could well be just a step further out.
As inner-ring housing has gained popularity, prices have risen. With young households feeling the inner-city price pinch, many are beginning to favour a more conservative approach. The well-considered buyers are looking to the middle ring. Suburbs such as Wavell Heights, Kedron, Stafford, Stafford Heights and Chermside are all providing options on the north side while Carina Heights, Carina, Camp Hill, Coorparoo, Holland Park and Holland Park West look good south of the river.
And a good thing it is to see these areas start jumping! Town planning and infrastructure has resulted in these suburbs becoming better serviced and effectively closer to the CBD. Ask any long term resident and they’ll tell you tunnels and bus ways might have been an inconvenience during the construction phase, but now that they’re done, the convenience is priceless. We might be just at the start of this mid-ring surge so keep your eyes peeled for bargain property in these addresses – particularly holdings where a little renovation might go a long way to boosting equity and lifestyle.
When it comes to areas of concern, it should surprise no one to hear us say be cautious of investor-style attached housing in oversupplied localities close to town. We’ve been talking about our concern for this market for years now. If there is any upside worth mentioning, it’s that most developers can see the error of their plans to keep building towers. Many have chosen (where possible) to mothball projects or sell off their sites to avoid financial strain. As a result, supply of this new stock has abated to some degree.
The concern now is that many of the larger projects are completing and there’s every chance a few of the off-the-plan investor buyers will look to offload their holdings. Some will know what to expect and others could be in for a rude shock. We’re already seeing resales at a loss in this sector and if there’s heavy listing by out-of-town owners looking to get out, the rise in supply can only be bad for prices.
In addition, investors can expect to take another knock as financiers tighten up their lending criteria, particularly around interest-only loans. Tenants are in the driver’s seat too. They’re spoiled for choice and don’t mind exerting their power when it comes to signing a lease.
This recipe of oversupply, softening prices, falling rents, higher vacancy and tighter lending looks a bit dire for these landlords.
The caveat here is around owner occupier holdings. Quality home-style units are finding appeal, particularly those being built by well-known, highprofile developers with a reputation for building apartments with a prime position and high-end fit out. Demand for these units is good and should continue in 2018.
Finally, there have been a lot of column inches dedicated to the idea that a surge of Sydney owners will wash across our Brisbane real estate landscape, sucking up all the affordable properties and leaving local investors in their wake with rising houses prices keeping them at bay. While we have a recipe for price gains here in Brisbane, there are more ingredients to be sourced. We have to deal with economic growth and the current unemployment rate for a start. Also, infrastructure builds need to take hold.
In this respect, there are some promising developments – the Queens Wharf project, Cross River Rail, the airport and port upgrades, the Howard Smith Wharfs project are all doing their bit to raise the city’s profile and boost job numbers. These projects are still long-term prospects, so don’t expect their impact to have city changing outcomes this year.
While we’re seeing the first signs of Sydney buyers coming to town, most are definitely at the higherend where they can afford to sell up down south, head up here and buy a home plus an investment property. Many are also lifestyle buyers, meaning they are coming to Queensland but deciding to settle on the coasts. These buyers are a beacon of what can happen as net interstate migration heats up in Queensland, but the drive of southern money prices is in its early stages and may not become fully entrenched in 2018.
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