Why I’d buy in Brisbane - April 2020
There’s really not much to dislike about Brisbane.
It’s a visually stunning city where the sun almost always shines, life is lived largely outdoors, the pace is a little slower and the community spirit strong.
But from a property investor perspective, it’s just as appealing. The population is growing at a rapid pace, and housing remains extremely affordable – for now, at least.
According to the most recent data from the Real Estate Institute of Queensland (REIQ), the Brisbane LGA median house price is approximately $670,000, while units recorded a $440,000 median.
In addition, investors can easily seek housing yields between four and five per cent, while units and townhouses regularly exceed five per cent. It means those reliant on an excellent rental return to help service the debt while waiting for the inevitable value rises are spoiled for choice. Given you’d struggle to achieve much above a three per cent yield for any property in Sydney or Melbourne, it’s hard to ignore Brisbane’s buy-and-hold potential.
At the same time, there’s still a projected long-term undersupply of new dwellings.
While I acknowledge that at the time of writing there were plenty of unknowns around the fallout from COVID-19, I believe fundamentals remain the best long-term indicators of success.
As such, I rate Brisbane as an excellent investment prospect, with a unique window of opportunity wide open for savvy buyers ready to pounce.
A city on the move
Queensland currently boasts Australia’s second-fastest growing population, with an increase of 1.8 per cent in the year to 2019, which is above the national average.
Interstate migration has been particularly strong, with stressed-out southerners keen to make the move north in search of a better lifestyle and more affordable housing. Overseas migration was also high late last year, thanks to the state’s highly skilled workforce in the mining and engineering sectors.
Brisbane’s population is forecast to continue to grow in the long term, reaching three million in 2030.
The state’s economy is strong and robust for the most part as well. There’s an increased diversification of industries in the capital, which is repositioning itself as a professional services hub as well as a hotspot for secondary corporate headquarters.
Despite its rosy prospects, things have been a little quiet in the property market over recent years. It’s played the support act to two stars, Sydney and Melbourne, and chugged along at a moderate pace.
But that’s set to change in the future. BIS Oxford Economics had forecast median house price growth of 20 per cent in the next two years. That outstrips the predictions for any other capital by a long shot. Unit medians are also set to jump by 14 per cent in that period.
Again, while Coronavirus will play into performance, these pre-crisis figures set a solid foundation.
Lower interest rates, easier access to credit and the lure of low house prices are big contributors for this outlook.
Infrastructure will also be a major driver in the future after sitting mostly dormant since 2007. The REIQ have reported that the top 10 infrastructure projects in Brisbane have a forecast investment of $17 billion over the next six years. These works include the $3.6 billion integrated casino resort precinct of Queens Wharf, the $6.8 billion for cross river rail and the Brisbane Live entertainment complex.
Getting out of town
Brisbane’s comprehensive road network and relative lack of congestion compared to Sydney are a big plus too. Not only is it easy to get around, but the ability to buy in more affordable outer suburbs within the greater Brisbane region without needed to compromise via long travel times is a bonus.
A few areas in particular have caught my eye. The adjacent northern suburbs of Mango Hill and North Lakes are an excellent option for investors. These areas were the city’s growth zones over the past decade. North Lakes was a multi-staged planned community that now boasts a regional shopping centre, commercial hub and industry/bulk goods zone.
Housing is diverse in design, but of relatively new construction. You can pick up a lowset brick home with four bedrooms on a 500sqm lot for around $450,000, and tenant demand remains strong given the suburb’s comprehensive community facilities and ready access to the Sunshine Coast.
Another area worth your while is the Redcliffe Peninsula where a mix of established housing and new units is on offer. This is a truly coastal community with plenty of views across the bay on offer. Gentrification over the past decade has been a boon to locals, but it still remains a relatively secret region for buyers outside Brisbane.
If you’re keen on more established housing, then Petrie in the north has plenty to offer. As well. There’s a mix of new and old homes plus some townhouses on offer. The drivers here include the recently opened University of Southern Queensland campus helping bring a raft of young, new residents to the area. In addition, the Petrie Train Station serves as a major transport hub for the area with services to both the CBD and north to the coast.
An irresistible proposition
The lifestyle factor is something that sets Brisbane apart from its interstate capital city counterparts. Put simply, life in southeast Queensland is good.
It’s sunny for a big chunk of the year. There’s a major focus on outdoor living, with people spending their weekends out and about in parks, by the river or at the beach. Locals love their food and fresh produce, with some exceptional dining on offer.
And the pace is just a little bit slower than in Sydney and Melbourne. Whenever I visit, I’m constantly struck by that easy-going sensibility. It’s refreshing! Brisbane also doesn’t take itself quite so seriously.
Many suburbs, particularly those within 10 kilometres of the city, have a village feel about them and are centred around retail and community hubs. Streets tend to be wide, tree-lined and peaceful.
Of course, the style of architecture is unique and stunning. Queenslanders – the big high-set homes with wraparound verandas – are truly something else and most of my Sydney and Melbourne clients fall in love with them instantly.
It’s almost a decade since the horrific floods that devastated Greater Brisbane, forcing countless families from their homes as they were inundated.
Some never returned. Their properties were essentially written off and what’s left was demolished, with the decision made that rebuilding was too risky.
Brisbane is prone to flooding. The 1974 and 2011 floods were major events and caused significant devastation, but more frequent – albeit less catastrophic – localised flooding occurs in many locations. Brisbane City Council has flood mapping available, so you can check if a street and suburb you’re interested in has any issues.
Some investors with a high threshold for risk were happy to snap up properties that were flooded in 2011 but only minorly. It’s critical that you do your homework and understand what risk you’re taking on, and whether it’s suited to your investment strategy.
Another thing to consider when you’re shopping around is the supply of units. There were oversupply issues a few years back, particularly in inner-city suburbs, due to an explosion in construction activity.
For the most part, this seems to have eased and the balance is returning to normal, but there are still small pockets where an abundance of development might make unit buying unappealing, at least in the mid-term.
It’s also worth taking a close look at recently built unit stock to ensure it’s of a high quality, rather than a churn-and-burn and low-grade development.
Brisbane has all the makings of an excellent investment prospect with property ripe for the picking, but being selective about what to purchase is key. Using an expert to help sift through the options and select the best prospects is essential for long-term investment success.
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