Brisbane July 2017

The month in review: Brisbane

By Herron Todd White
July 2017

Despite a generally underwhelming performance since 2008 from Australia’s third-biggest eastcoast capital, there’s evidence Brisbane has gained popularity in 2017.

Southern buyers in particular over the past six months have ramped up activity, and demand for high quality property in cracker-jack locations continues to be strong. The recent interstate migration figures look promising also, and as long as we continue to find paths towards employment growth, Brisbane seems like a pretty safe option for real estate investors.

This is all to say that $500,000 is generally a less impressive figure for purchasing property than it was a year ago – particularly in blue-chip, inner-city locations. In fact, this amount won’t get you much in the way of a detached home in the inner ring, and only a selection of middle-ring property will fall into this value bracket.

But there are options in Brisbane for your lazy half million.

For houses in the northern suburbs, Aspley has been in recent headlines as a well-established, owneroccupier address with quality homes on large sites. With $500,000, why not check out a renovatable detached dwelling. Our best tip: don’t waste any time if you find the Aspley renovator that ticks all your boxes. This sector is getting very warm and quality stock at this price point won’t last long.

If you can’t get into Aspley for these dollars, give nearby suburbs such as Boondall, Bracken Ridge, Deagon, Zillmere or Taigum a shot.

If you’re willing to step a little beyond $500,000, then your purchasing power improves considerably. Areas such as Kedron and Wavell Heights really are worth a look, but the buy in begins in the high $500,000s with many homes pushing into the $600,000s. The lower-price benchmark for any nearcity suburb is to see if there’s been recent vacant land sales of interest and see how much they’re getting. Given cleared 400 square metre sites are fetching over $500,000 in Kedron, you can see why it’s tough to get in for less. Wavell Heights is a little cheaper, but not dramatically.

South of the river and you’ll be looking at suburbs such as Runcorn, Calamvale, Parkinson or even Salisbury for an abode. Mind you, $500,000 in Salisbury is going to get you a fairly modest house, and it will be small.

The northern sections of Oxley are a bit of a hotspot at the moment too. You can find older homes here at the right price. Similarly, brick lowsets in Runcorn are a chance. Otherwise, a smaller brick house in Parkinson, Algester or Calamvale (if you’re lucky) can be a good buy.

Another option is buying a $400,000 house in Acacia Ridge or Inala. Theses suburbs are quite popular at this price point and most investors seem to have their holdings positively geared.

Speaking of investors, detached homes for the figure will usually need some renovation, so the yield on the purchase price will be tight at say 3.5% to 4.5%. If you rent to students on a per room basis, as is often seen in Robertson or Sunnybank Hills, then you’re looking at $200 to $250 per room per week, which could reflect a 6% to 8% yield.

All in all, if you’re invested in our town regardless of the amount, we suggest buying as close as possible to the CBD. Homes close to the city have traditionally stacked up well in term of capital gains.

Turning our attention to attached housing and we’ll start with a warning. Steer clear of high-density units for time being. The oversupply situation in our innercity is well documented with new, investor-led stock having a hard time finding buyers. Our feeling is that prices may soften further.

While good second-hand unit stock offers potential for some investors, be very cautious about what you buy and where. As always, shoot for decent fundamentals around unit size, bedroom size and layout, low body corporate costs and ready access to services and facilities. Also – don’t expect big, fast capital gains in the short-term. If you are delving into this sector, you must keep your eyes on the longterm prize.

A more reasonable option might be to look at a townhouse in the likes of Kedron or Chermside. This sort of accommodation can still provide a semiprivate abode with a small courtyard but at less than the cost of a house and with less risk than a unit. The market for townhouses in these areas has remained fairly stable and $500,000 will get you a pretty good property with some of the older semi-modern townhouses actually in early- to mid-$400,000s. New townhouses are still attracting a premium however, and developers are starting to market these to owner-occupiers – particularly first home buyers who can’t afford a dwelling in these good areas. As such, developers are shooting for slightly higher quality specs or larger internal floor area.

If your adding your townhouse to the rental pool, expect a gross yield around 4% or even a touch higher.

In the south, townhouses in Calamvale in select complexes will be your best bet as they are showing positive capital growth on resales.

Looking to the future and we can’t see reasonable quality property in good locations at the half-million price point lasting long. Buyers with this sort of money will have to step further and further out as the years pass. We anticipate that in the next few years $500,000 will only get you into the market in areas such as Bald Hills and Bracken Ridge.

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.