Multiple major research firms are stating that Brisbane can expect a property boom over the next five years.
The evidence is outlined in a February 2018 article from CoreLogic, Jones Lang Lasalle’s Q4 2017 Apartment Market report, the CBA January 2017 State of the States and data from the Real Estate Institute of Queensland (REIQ).
Factors include a combination of affordability and a large price gap between other capital cities, strong interstate and overseas migration, solid jobs, economic and wages growth forecasts, all combining with a reduction in apartment supply.
The CoreLogic article states that “Brisbane is well placed to take over as the best performing capital city housing market over the next five years,” citing a variety of economic and demographic factors
Affordability is a large factor for CoreLogic’s prediction, citing Sydney house values being 102 per cent higher than Brisbane’s, while Melbourne’s are 57 per cent higher.
This is despite Sydney residents only earning 12.9 per cent more than Brisbane’s, while Melbourne residents are actually earning 0.7 per cent less, according to the CoreLogic article.
“The relative gap in pricing between Australia’s largest cities is likely to be one of the factors that attracts housing demand to [Brisbane],” the article states.
Apartment supply and vacancy rates reducing:
One of the factors that has been holding Brisbane back is the apartment construction boom.
However 2018 should see an end to the oversupply, according to Jones Lang Lasalle’s Q4 2017 Apartment Market report.
It states that “Brisbane’s supply peak was in 2016 and a particularly tough development-financing environment will mean the pipeline will drop sharply from 2018 onwards.”
With that, all the fundamentals which drove investment in Brisbane in the first place will begin to drive capital gains on property.
There is already evidence of this in the form of reduced vacancy rates in Brisbane’s middle ring.
An article by the REIQ published on January 30 2018 states that vacancy rates in the middle ring (5-20 km from the CBD) tightened sharply from 3.4 per cent to 2.1 per cent between the September and December 2017 quarters.
While inner Brisbane (0-5km ring) vacancies lifted from 3.7 per cent to 4 per cent during this time, the REIQ expects it to follow the lead of the middle ring.
“Our expectation is that demand will start to catch up to supply very quickly and vacancy rates will return to the typically healthy levels this market usually achieves of around 2.5 – 3.5 per cent,” the REIQ’s CEO, Antonia Mercorella said.
Population and economic growth:
One of the factors helping balance the supply-demand equation is Queensland’s strong population growth, economic growth and huge infrastructure pipeline.
The Commonwealth Bank says Queensland had the third fastest growing population in the country – growing 1.64 per cent over 12 months – in its January 2017 State of the States report.
Queensland economic growth is also strong, growing at 9.3 per cent, second only to the Northern Territory. It also had the fastest growing employment figures, up 4.6 per cent over 12 months while wages in Queensland also grew by 2.2 per cent, equal first with Victoria and Tasmania.
The combination of these promising data sets and credible independent forecasts, means Brisbane finally looks set to achieve the capital gains we always knew it would.
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Important Note and Warning: This information is general in nature and should not be considered personal tax advice. We highly recommend you discuss these concepts with your accountant, property investment adviser and investment finance mortgage broker jointly to ensure any considered concepts are suitable for your personal financial situation, as one effect of the concept may negatively impact another part of your plan.