The Smartline Report – February Edition

The month in review: Brisbane

By Herron Todd White
February 2015

Last year was healthy. About six per cent across the board with inner areas doing better, but outer suburbs not so well. Overall though we are a capital whose recent property history has been relatively unhealthy. Apart from post-GFC hangover, our 2011 flood and other moments of failing to fire meant many expected a hot, hot run in 2014. It didn’t quiet pan out that way, but there is positive momentum that lays a foundation for 2015.

Buyers shouldn’t expect Brisbane to perform like Sydney – it just doesn’t. We’ve had our years of 20 per cent growth but it’s highly reliant on interstate and overseas migration as well as strong employment prospects and general economic good times.

Our cheaper buy-in prices are, however, attractive for those looking to get into a capital city, so there’s still plenty to offer here. Overall, we’re saying Brisbane property owners should expect to see the number of sales and other general activity to continue along the same lines established by the end of 2014.

Translation – look to our long term averages and you’ll be about right for 2015.

New construction is expected to be buoyant for both house/land packages and units. The building industry is being touted as an employment savior that can pick up the slack of mining industry layoffs, after all.

In terms of suburbs on the go, the “ripple effect” appears to be well underway. Inner and near-city suburbs saw attractive gains in 2014, so it’s time for suburbs further out to start shifting as affordability close in becomes more of an issue. Mid to outer suburban areas are now experiencing a pickup in buyer demand, or more specifically, entry level property within these locations. Investors are certainly keen to stay ahead of the wave of course, and there’s interesting infrastructure underway to help drive gains. The train line extension to the Redcliffe Peninsula is a case in point. For this reason, try looking a bit beyond the currently growing mid ring suburbs if you want to shore up equity gains this year. Those affordable markets should put on a respectable performance over the coming year.

As for the inner city hotspots, they seem to have hit a sustainable level of price growth that should continue over the next 12 months – once again long-term averages are your guide.

Our strongest caution for those looking to invest in 2015 is to watch out for unit stock. Specifically poorly designed investor grade product – there will be a lot of it coming on line and if the developer’s only thought is to offload end-product quickly without considering their project’s ability to maintain value over the longer term, then those who buy are in for grief. Overall, buyers need to be conscious that this market is experiencing significant uplift in supply over the next one to two years at a time when the vacancy factor has already increased and interstate migration is still languishing.

This could keep the overall market relatively honest because there’s potential for the new unit supply to draw on the suburbs to some extent plus new house/land construction.

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325