By Steve Waters
Let me start by saying: All of the property data coming out of Brisbane is wrong.
Its market has actually been a lot better than what the statistics are supposedly showing us – especially in the South-Eastern and Northern corridors because of affordability.
The medians have been pulled down because of the softer conditions in the new unit market, with the whole oversupply scenario now acknowledged by everyone, including the general public.
That sector is experiencing a decline in prices as well as in cash flow because of increasing rental vacancies.
However, people need to understand that that supply will be absorbed over a period of time, but that doesn’t help those homeowners or investors who are hanging on by their fingernails at the moment.
Areas to watch
I believe that North of Brisbane, in and around the Moreton Bay Shire, will start to accelerate.
We have been investing there for a while because it’s affordable, there’s the new rail link, and a diverse demographic. But I would suggest staying away from some of the greenfield sites where there is extensive new development because of oversupply concerns.
I believe established stock will outperform the market in the affordable North and South corridors, which it is already doing but the data just isn’t showing that.
We’ve had up to 15% price growth in some areas in the past 12 months, which is an amazing result.
Larger blocks of land will also do well in these locations as people start to look at options in the future for subdividing or creating secondary incomes by constructing separate dwellings.
I still believe that established townhouses, villas, and units offer great opportunities in these areas because some are achieving yields of 7% or better.
At the moment, too many buyers are concentrating on traditional house and land products, but once interest rates start rising – which is already happening, independently of the Reserve Bank – investors will begin searching for better yields.
In my opinion, there aren’t many places around Australia with the infrastructure, the affordability, and the yields than the affordable corridors of Brisbane. With increasing interest rates, investors will choose to go into these areas, which will force prices up.
On the surface, you’ll start to see some of the yields in these corridors start to decline, but that’s not because rents are falling, it’s because prices are going up. As an investor, you need to understand very clearly what the data is telling you.
Bullish about Brisbane
Brisbane is looking rosy for the remainder of 2017.
But it’s important for investors to understand the dwellings that are likely to do the best this year.
I believe the established attached dwellings mentioned above will outperform the market in the 20-30km ring around the CBD and will provide good growth and cash flow.
In the inner-city, detached houses in the 5-10km ring from the city are also a safe investment, if you can afford them.
Consumer confidence in Brisbane is starting to pick up and interstate migration is also increasing.
The media is also reporting more on the positive property price differential of Brisbane compared to Sydney and Melbourne, which is another sign that its market is on the move.
I believe there is a place for a Brisbane property in everyone’s portfolio but it doesn’t mean that your whole portfolio should be based in Queensland.
So look for established townhouses in the affordable corridors surrounding Brisbane that also have a good cost to operate as well as older houses closer to the city.
I believe Brisbane’s market is yet to truly shine so that’s why we’ve been buying as much as we can in the capital city of the Sunshine State over the past 4 years.
By Steve Waters