Brisbane Property Market Insights for 2019

This sentiment is echoed by the latest Finder RBA Cash Rate Survey in which Brisbane and Melbourne topped the list for the most favourable cities to invest in. The two cities shared the top spot attracting 27 percent of votes, comfortably beating Sydney which received just 14 percent.

The upbeat outlook is based on several factors including low interest rates, a booming local economy, low unemployment, a plentiful supply of affordable housing and a skyrocketing local population. Overall the economic outlook for Queensland remains good and is supported by several Australian economic drivers, including:

A low official cash rate which is expected to remain low for the next 3 years. The rate is expected to climb by no more than 50 basis points by 2022, a rise of 1.5 percent.

Low unemployment with the unemployment rate projected to fall to 4.8 percent, down from 5.1 percent in 2019.

Strong consumer prices, with the consumer price index expected to increase by 2.5 percent to 80 basis points.

Strong Australian Gross domestic product with GDP set to grow by 2.9 percent in 2020 up from 2.1 percent in 2019.

As a result of these underlying factors, Insurance giant QBE predicts that Brisbane property prices will increase by 20.3 percent over the next three years, outstripping other markets including Sydney, Melbourne and Perth.

Before you rush out and start investing your hard-earned money in the Brisbane suburbs, some property professionals have cautioned that there is still a risk that property prices in the city may be affected by an oversupply of new units.

QBI CEO Phil White told investors that “while forecasts for the Brisbane house market point to solid growth, and the fundamentals do look very strong, there is a risk that consumer caution and oversupply of units could temper these projections.”

New building approvals in Queensland fell by 19.1 per cent in the twelve months to September 2019. This compares to an overall drop of 21.1 per cent for the rest of Australia in the same period. It remains to be seen if this fall is enough to temper concerns of oversupply in the Brisbane market.

Data from CoreLogic’s Hedonic Home Value Index shows that property prices across Australia have been steadily climbing since May. The month of September saw property prices climb by 0.9 percent, marking the second straight month of gains.

When looking at the local Brisbane market, data from SQM Research shows that property prices in the city increased by 1.2 percent across the year and 0.3 percent in September.

Brisbane, like most other cities in Australia, has seen prices at the high-end soften. But prices in the mid-market and affordable homes segments stood up pretty well. House prices in these segments rose by 0.8 percent and 0.7 percent respectively in the third quarter. According to CoreLogic data, the median house price for Brisbane is now $647,500.

The rental market also remains strong in 2019. Brisbane was the only capital city to record an increase in weekly rental rates in September for both houses and units. SQM Research data shows that houses saw rates increase of 0.9 percent while units saw an increase of 0.6 percent.

However, the oversupply in some inner-city suburbs has previously affected vacancy rates with property investors met with negative results on both capital gains and rental yields. But overall these concerns should ease as new construction commencements fall and population growth continues to accelerate.

While the outlook for the Brisbane property market remains positive, backed by strong fundamentals including higher rental yields, population growth and good availability of affordable housing stock. The city still represents a significant risk for investors, especially those that don’t do their homework.

One of the main risks is the oversupply of new housing units which has plagued the Brisbane market for several years. These concerns should dissipate as the number of new construction commencements falls. But there is still a risk that rental yields will be affected by oversupply in some inner-city suburbs.

Flooding is also a factor. Brisbane is situated on a flood plain which can cause massive devastation and affect insurance premiums, so buyers are advised to check local flood maps and assess the risks carefully before investing in any property located in the downtown or inner-city areas.

Investors seeking a restoration project may also be affected by planning restrictions. Older homes in the city are protected by the Character Overlay, while homes built before 1911 are protected by the pre-1911 Overlay. This restricts the type of renovations which can be carried out and requires that permission be gained from the council.

Brisbane is a widespread city which offers something for all types of investor. But one of the hottest areas right now is the area surrounding the new education precinct. This is where the new University of the Sunshine Coast is set to open in 2020 and it provides a good opportunity for investors to purchase properties under $500,000.

Another area on the radar right now is Redland City, which according to CoreLogic’s Pain and Gain report has the highest potential for generating positive returns for sellers. The report shows the region generated the highest resale profits in September compared to every other council region in the city.

If you would like more information about investing in the Brisbane property market, don’t hesitate to get in touch with me at Sparrow Real Estate. I am always happy to discuss property investment strategies and advise you on the best properties to purchase to build a balanced portfolio. You can contact me using the form here - alternatively, give our office a call on (07) 3054 7050.