The month in review: Brisbane
By Herron Todd White
Based on average capital growth rates, $500,000 invested last year is probably worth about $530,000 if the approximately 6% per annum broadcast rate is accurate. Brisbane is a traditional market that loves property fundamentals – detached homes close to the CBD are always a sure thing. No matter what sort of market you’re in, because in relative terms the strongest demand tends to lay close to the city.
In 2014 we were suggesting Mt Gravatt as an option with homes in the high $400,000s and early $500,000s on offer. This year our southbound valuers feel things have tightened, so the ability to purchase under $500,000 now lies beyond the 10-kilometre ring. Suburbs such as Eight Mile Plains and Runcorn are being mentioned in dispatches. They haven’t been the sexiest of investment addresses in the past, but they are affordable and do appeal to renters. Twelve months ago you may have found options in Salisbury, Tarragindi and possibly even parts of Holland Park, but it’d be a rare gem if you could come across something there now. The same could be said for Stafford or Keperra on our north side. It may be a case of venturing to Brighton, Sandgate, Deagon, Boondall, Taigum or Backen Ridge to find the sub-$500,000 stuff as well.
Eight Mile Plains and Runcorn are positioned 12 to 14 kilometres from the CBD. For your half-million, expect to pounce on a 1980s high set brick and tile house of average condition with 3-bedrooms, and 1-bathroom. Rental would sit at around $430 per week, or a gross yield of about 4.5%. This is steady real estate with good long-term prospects, particularly given proximity to Garden City and associated public transport. Add to this that the neighbouring suburb of Mount Gravatt has been identified as a suburban node in the Brisbane City Plan. This means you can expect increased development in the area over the next few years, which helps feed demand in the locality.
Attached units certainly provide far more options for those with $500,000 to spend – particularly when it comes to second-hand stock. Coorparoo, Greenslopes and Annerley all come to mind as areas worthy of consideration. You’ll certainly get change out of half a million as you can expect to buy a 1980s unit of 2-bedroom, 1-bathroom accommodation from the early $300,000s and up to $400,000. Yield is about 5%, which is plenty in our current low interest rate environment. If you want to seek similar stock north of the river, check out Alderley, Gaythorne and Enoggera where you’ll find options at a 5% gross yield.
When it comes to areas of caution, new units are definitely being red flagged – particularly those built to attract investors and in areas of potential oversupply. Do plenty of research if your even remotely thinking of buying off-the-plan. Better yet, make sure you have a valuer check it out first. In this sector, the units that hold their value best are the ones designed and finished to appeal to both owneroccupiers and investors. Another sector to be wary of is properties located in secondary areas in outer lying suburbs.
While property has performed well this year, there’s an expectation the market will be reasonably static over the coming few months, even with low interest rates. There’s still a lot of uncertainty around the economy and around job security, and out net migration isn’t running at levels high enough to drive a boom. Rents will likewise remain flat, particularly in inner city areas where there is new stock just on the market or due to be completed within the next 12 months.