The Smartline Report – September Edition

The month in review: Brisbane

By Herron Todd White
September 2015

The Manhattan-isation of Brisbane continues at a staggering rate with an extraordinary number of very tall residential towers set to come out of the ground over the coming years. Not all of them will ‘proceed to final’ of course, but with seven to ten years supply in the works, you’ve got to think we may hit a saturation point very soon.

Unit living has become more and more fashionable in our city. We’ve had the reputation of being a ‘big country town’ for so long, and that’s had a lot to do with available land being in good supply. Brisbane was full of property that came under the banner of the ‘Great Australian Dream’ – a quarter acre block with a house – right up until the mid-1980s really. Over the past 25 or so years, however, urbanisation toward the CBD has progressed with a mix of hipsters and empty-nesters keen to take up space within walking distance of city hall.

As for how developments have changed in recent years, there’s far more 1-bedroom units without car spaces making their mark. This design means a lower buy-in price point for inner-city abodes, particularly for those single- and couple-residents, and investors that are looking to tap into these tenants.

At the other end of the scale, owner-occupier stock is growing in popularity too with a marked increase in 3-bedroom units being made available to locals.

Of course, there’s been a lot of talk about the offthe- plan market and much of it isn’t positive. While some tall towers are reporting strong sales, the truth is many are to non-local investors who want to grab a piece of Brisbane. There are a lot of analysts and observers speculating that our market will be the next capital-city boom. As a consequence, supply of investor style, off-the-plan stock is on the rise and the full impact of the oversupply situation may not become apparent until after many of these buildings are completed in some 12 to 18 months. Add to this the recent changes from the Australian Prudential Regulation Authority which will curb lending to investors through tougher qualifying criteria and more onerous risk assessment. This is all within an environment of softening rental demand as well, and there are plenty of investors who may not see their initial rent yields maintained.

Valuers are often viewed as a conservative bunch, but really, we just like fundamentals. They’re good, solid, reliable guidelines that have yielded steady results time and time again. When it comes to units, there are some basic rules you can apply to try and keep the risks low. First and foremost, consider well located second hand units. Best of all, try those 1970s and 80s properties with at least 2-bedrooms and covered (preferably lockable) car accommodation within established well serviced suburbs. All the better if you can find something that’s discounted in price because it needs a little work. These things are always great to hold in your portfolio and tend to get solid demand from tenants. While we’ll always recommend being close to town, even mid-ring suburbs with ready access to transport offer great buying. For example Greenslopes and Coorparoo provide good sized units that can be renovated, and most are close to public transport, facilities and schools.

While the upper end is interesting to watch, everything is pretty steady across the board with no specific star performers… but that doesn’t mean there hasn’t been a little eye-candy to mention. Sydney readers may be unimpressed by this, but a $5.275 million unit in Ciel on Moray St, New Farm caught our valuer’s eye. Partly, and unfortunately for the seller, because it was previously purchased in 2007 for $5.6 million. Perhaps a sign that while prestige is picking up, there’s still some way to go.

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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