Is Brisbane the right move to invest in 2020?

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    Much talk has been made of the various property markets in Australia and their tendency to move through cycles. With the property market decline in the past two years, the property market ‘boom’ spotlight has now been shifted off Sydney and Melbourne as they moved through their expected correction and stagnation phases, many now speculating the next growth hotspot.

    For a while now, Brisbane has been earmarked as a market of potential for many, the results to date have been underwhelming however, based on various market trends and indicators it’s now looking more likely.

    Rising interstate migration

    In the past relative affordability in comparison to Sydney has seen a rise in interstate migration.

    The driving force behind the trend, is the Sydney property market cycles. Over the past 40 years, the Sydney markets 3 most significant growth cycles have been 1984 – 1990, 1999 – 2004 and 2012 – 2017, all of which led to strong increases in interstate migration for QLD with unaffordability driving many out of NSW.

    The real effect of this migration increase has come into question and rightly so, how influential can an additional 30,000 people be to an entire capital city market.

    ABS median house price data, recorded the following median house prices for Sydney, Melbourne and Brisbane:

    • Sydney: $875,000
    • Melbourne: $680,000
    • Brisbane: $535,000

    Sydney is currently 64% more expensive than Brisbane, from an affordability perspective, average household incomes are only 12% higher in Greater Sydney than in Greater Brisbane. Each time we’ve seen the price gap rise we’ve seen an exodus of people out of NSW to QLD resulting in Brisbane price increases.

    Not to mention, the significant infrastructure pipeline with over $21 billion worth of committed and commenced projects in Brisbane. These are all creating jobs now but will provide the foundation for future employment.

    Not only are these projects creating employment and a reason to move to Brisbane, but they are also transforming the city. In the last five years alone, Brisbane has changed significantly with the emergence of world class restaurants transforming the dining scene in Brisbane rivalling the likes of Sydney and Melbourne.

    The evolution of Brisbane combined with the proven market drivers above will be critical to the direction in which Brisbane’s property cycle moves. In terms of price rises, we’ll require the imbalance of supply and demand to favour the demand. Over the past four years, Brisbane’s supply issues have been well publicised. What this means, is that it’s now more important than ever to be understanding the various markets that sit within the wider capital city markets.

    Supply is now slowing and it’s occurring at the same time as a strong rise in population.

    In saying this, there’s definitely area’s in Brisbane to avoid according to head of research at Binnari Property, Dominic Cavagnino.

    “Over time, supply will be soaked up and performance will likely be more consistent across the city however in the short to medium term area’s like South Brisbane, Fortitude Valley and West End, where supply levels have been much higher will likely see lower rates of price growth” he said.

    As an example, Hamilton and Ascot provide contrasting supply levels despite being neighbouring suburbs. According to Cordell Connect, Hamilton currently has 665 apartment dwellings under construction as opposed to Ascot with only 102 apartments under construction.

    Mr Cavagnino advises that “Successful investing requires market cycle timing but equally as important is the understanding of a market,” he said.

    “Identifying areas of low supply and high demand is critical to property performance. Anecdotally, we’ve seen rents rise across properties our clients have invested in in Brisbane. A focus on boutique projects that are genuinely being purchased by local owner occupiers is vital to investing successfully.”

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    Original Article