The latest October 2019 BIS Oxford Economics (BIS) Residential Report re-confirms its earlier forecast for the Brisbane property market to be the standout performer over the coming 3 years with forecast growth of 20.5 per cent for houses and 14 per cent for units, equating to a $113,000 rise in the median house price by 2022.
In addition, Brisbane’s higher gross rental yields, which currently range between 4-6 per cent, significantly outperform typical property cash-flows in Sydney and Melbourne by as much as 50-100 per cent.
Brisbane is further stamping it’s authority as the nation’s place to invest with it’s skyline undergoing huge transformation in it’s drive to become the ‘New World City’, being under-pinned with $18B in infrastructure projects over the coming 8 years. Brisbane’s extremely slow growth over the last 10 years has created an opportunity for investors to enter a highly affordable market relative to Sydney & Melbourne, which are still forecast for sluggish growth over the next 3 years.
When it comes to ‘what’ to buy in Brisbane, BIS reports houses to be a safe bet, however there is growing data to suggest that well-selected apartments in the right locations will outperform the housing market in the next 8 years whilst also outperforming houses in terms of rental returns and cash-flow.
So, what are the key factors driving demand for apartments in Brisbane?
Demand for apartments in Brisbane is largely being driven by the relative affordability of these properties in central locations close to amenities, transport, and employment. There are still opportunities to purchase brand new one-bedroom apartments in the Brisbane CBD for around $400,000, this is the last time they will ever be at these prices.
Demand is also being driven by strong population growth mainly through interstate migration with people moving to Brisbane and wanting to live/rent in close proximity to the CBD.
There are also growing behavioural trends to suggest that many buyers are more willing to trade property size for a more ideal and convenient location closer to employment and amenity. In addition, people are living busier lives so there is more appeal in the lower maintenance aspect of apartments.
Property markets operate in cyclical booms and plateaus and the Brisbane apartment market is coming out of a 10 year period of no growth which has created a huge opportunity. A contributing factor of the previous slow growth was the oversupply of apartments, however figures from BIS and other relevant sources show supply of new apartment commencements is sharply declining and quickly being soaked up by the strong demand. The diminishing supply levels will put upward pressure on apartment values, and have already started helping to lower vacancy periods (in some cases with tenants being put on a waiting list) which will likely lead to healthy rent increases in coming years.