The Australian real estate market has bounced back strongly since it bottomed after the global financial crisis and new information revealing the best performing regions. I
n Queensland, Brisbane house values rose 11 per cent since its previous trough in December 2012 while unit values increased 7.7 per cent.Brisbane has been relatively flat for the past four years, and it has been reported that investors are starting to see that Brisbane is likely to see an upward level of activity.
Features of the Brisbane market that are attractive to investors is that the median rental yield for houses in Brisbane is currently 5 per cent, compared with 4.1 per cent in Sydney and 4.2 per cent in Melbourne. Also, Brisbane’s median house price is just over half of Sydney’s while Melbourne’s median house price is also well above Brisbane’s.
The rental yield for units is also stronger in Brisbane, at 5.17 per cent, beating the 4.52 per cent in Sydney and 4.55 per cent in Melbourne. The rate of growth in property values in south east Queensland is tipped to out-do the growth Sydney has already had, within the next three to five years.
Parts of regional Queensland face significant challenges as the mining construction boom fades and following the crash in coal prices.
Unemployment has clearly been rising in regional Queensland, but to date Brisbane’s economy appears to be holding up relatively well.
Owner-occupier demand for housing finance has been rising solidly and investor demand has continued to increase to its highest level since 2007 after a significant dip in the intervening time.
Population growth in Queensland is notably slowing as interstate migration to the sunshine state tails back from very high levels.
While apartment completions have not yet been anything too remarkable (see below chart), the number of commencements and approvals have picked up sharply in Greater Brisbane. Unit approvals now seem to be receding again which is good news for the Queensland capital.
Vacancy rates are a little elevated in certain parts and suburbs of Brisbane, so investors need to tread carefully and asset selection will be key. But the housing finance data suggests that for Brisbane we can expect to see a solid year or three ahead, beginning with robust capital growth in 2015.
Brisbane 2015 forecast: +5 to +8 percent.
You cannot discover new oceans unless you have the courage to lose sight of the shore. [Andre Gide]
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