The Smartline Report – June Edition

The month in review: Brisbane

By Herron Todd White
June 2015

Here we sit with June upon us and it seems Brisbane is in the midst of another fair-to-middling performance.

2015 started with plenty of promise and certainly there are any number of buyers’ agents and other observers out there claiming the Sunshine State capital is the best prospect for the Australian property investor. Unfortunately, out on-the-ground experts say there’s been a bit of a lull in urgency amongst buyers in those usually firing inner-city northern markets. New Farm and Paddington, for example were two suburbs that were achieving good premiums up until a couple of months ago, but demand has waned a little. Whether it’s a matter of vendors overpricing their property or other factors at work, bidders don’t appear to be hyped-up at
auctions and paying the big dollars they once were.

Many are adopting a wait-and-see stance with a number of homes hanging around on the market. Despite this general outlook, renovated and brand new abodes with all the bells and whistles in desirable locations sell well and with a bit extra on the contract price.

Conversely, some southern inner-city suburbs are doing fine. Demand for dwellings in in West End and Highgate Hill continues to be strong for both entry level and properties nearing the $2 million mark.
Of course the Brisbane State High catchment continues to help sellers attract a premium.

The gigantic red-flag for Brisbane is inner city units, and their soft pricing is likely to continue for at least the next couple of years. Towards the end of the year and throughout next year, we’ll see a number of large off-the-plan developments settle simultaneously and the ability to absorb the supply looks shaky. Look out for increasing vacancy rates, particularly in second hand stock, as renters start moving into newer developments once they’re constructed. If you must buy a new unit, look for something that has appeal for owner-occupiers to help mitigate the risk.

In our middle-ring northern suburbs, we were seeing a ripple of capital growth, but this too has a slowed a little according to our team. The price point to look for here is entry level, particularly in desirable suburbs. This is the property likely to continue enjoying good results. Mid-ring in the south is experiencing increasing levels of interest, although secondary products sit on the market for extended periods. There’s good rental demand for established units in areas such as Coorparoo and Greenslopes, and proximity to infrastructure and public transport are important factors.

Outer lying suburbs in the northern corridor are doing quite well with a lot of interest evident in the house-and-land packages in new infill estates. Land purchases are in high demand pushing prices up and, subsequently, sales rates remain quite high.

In the south, outer suburbs are relatively static. Sales are occurring but there’s no evidence of an increase in values.

There are still a number of townhouse developments being built with the predominant purchaser being interstate investors and that means a risk of oversupply and a decline in rental returns.

Interest rate cuts haven’t done much to stimulate our market. The biggest impact has been to push existing borrowers towards refinancing in order to improve their cash flows. First home buyers continue to be
underrepresented in the market however investors still remain active in our inner ring.

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


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