Brisbane remains ripe for property investment

Investors
Expert buying advice drives property investment success
February 18, 2015
Young female investors
Growing youthfulness of serious property investors
May 25, 2015

Brisbane remains ripe for property investment

Investing in Brisbane

 

Over the past two years, residential market conditions in Brisbane have been improving with lifts in both demand and median values. Despite this growth, the market remains affordable and is currently ranked as the second most affordable market for attached dwellings and the third most affordable market for detached dwellings of all Australian capital cities. Many suburbs located around growth corridors and within close proximity of infrastructure investment are currently considered undervalued, particularly within the 5km to 10km ring.

 

WHAT OUR RESEARCH SAYS

  • Continued growth in Queensland across all areas of the economy
  • Major public and private infrastructure investment continues
  • Growth in demand for median valued residential property
  • Brisbane remains country’s most affordable capital city market for attached dwellings and third most affordable for attached dwellings.
  • Many suburbs in close proximity of infrastructure investment under-valued
  • Increased population driving demand for dwellings
  • Brisbane City Plan 2014 encourages diversity of dwellings and innovative solutions in key growth nodes and along transport corridors.

 

Employment, population and economic growth across Queensland’s capital city continues at record levels. Commensurate with this growth is a multi-billion dollar program of infrastructure projects – either under construction or in the planning stage. These have been put in place to cater to the long-term growth of Brisbane’s population and economy.

From 2009-2013 Queensland accounted for the highest increases in net interstate migration of all Australian states and territories. This was principally driven by outflows from New South Wales. However, with increasing employment opportunities and relative affordability throughout the state’s housing market, outflow from Victoria is projected to once again be a strong contributor to the state’s population growth.

Leading economist, BIS Shrapnel, projects that over the coming years, Queensland will continue to lead the nation in terms of attracting new interstate migrants.

Brisbane is projected to have a resident population of 3.9 million by 2056 (representing a total growth of 1.9 million people). This increase in population, driven by the city’s rate of jobs growth, is translating into improved levels of demand for residential dwellings throughout the city.

Brisbane’s economy is currently undergoing an expansionary phase which is underpinned by jobs growth, public and private infrastructure investment and increases in construction activity in both the residential and non residential sectors. The city’s jobs market is growing at more than twice the rate of population growth and, over the past decade, has sustained the fastest employment growth of all Australian capital cities.

Additionally, Brisbane exhibits the highest share of full-time jobs of all capital cities.

Ten billion has been invested in four major infrastructure projects between 2010 and 2012 which are now complete, with an additional $8.45 billion being committed for the delivery of a further four major infrastructure projects:

  • Legacy Way Tunnel ($1.5 billion) due for completion in 2015;
  • $650 million Kingsford Smith Drive Upgrade, due for completion in 2017;
  • Brisbane Airport Parallel Runway, due for completion in 2020 at a cost of $1.3 billion;
  • The landmark $5 billion Underground Bus and Train (BaT) which will be completed in 2021. (The new Queensland Labour Government’s intention to complete this is looking unlikely now and will probably be replaced by their Cross River Rail project.)

This level of investment in infrastructure has, and continues to ease congestion, improve access and open up new areas to house the future population.

The Brisbane City Plan 2014 – which came into effect on 30 June 2014 – provides the most strategic plan to date for managing the city’s growth. The plan lays down a number of new policies relative to residential development which ensure a greater diversity of dwellings across the city, together with innovative solutions to cater to demand for dwellings in key growth nodes and along transport corridors. These innovative planning principals, which are now in their absolute infancy, have created some compelling investment propositions for astute investors.

 

WHAT THIS MEANS FOR RESIDENTIAL PROPERTY INVESTORS

Added infrastructure will further enhance the attractiveness of Brisbane city, drawing in both owner-occupiers and investors. Although the entire region will benefit, some suburbs will benefit more than others with an increase in people wanting to live in areas adjacent new infrastructure (planned or underway), driving up prices and rental growth.

 

A WORD OF ADVICE

A balanced market of investors and owner-occupiers fuelling growth is critical to managing investment risk – that is, we want infrastructure fuelled by population migration to drive prices, not investor speculation as is the case in mining towns. What Brisbane is currently showing is a healthy balance of investor to owner occupier transactions whereas some parts of Sydney and Melbourne are not. For Sydney the risk is that once investors leave the market, the buoyancy disappears. Brisbane on the other hand has perfect balance, hence lower risk which is why our focus is currently within this market.