As New South Wales and Victoria continue to experience weakness. Queensland is expected to take the lead, a National Australia Bank (NAB) poll of property professionals revealed.
According to the survey, industry experts project house prices in Queensland to increase by 0.7% next year and 1.3% in two years.
Some areas seen to perform strongly over the next year include Brisbane, Cairns, the Gold Coast, and the Sunshine Coast. Out of the suburbs, Coomera and New Farm are expected to realize robust gains.
Meanwhile, Queensland’s rental market is also poised to enjoy an upward boost, growing by 1.3% next year and 1.9% in two years. This is despite the stricter rules on housing investment.
The respondents of the survey also expect Queensland to retain foreign buyer interest. In fact, the share of foreign sales hit a four-year high of 22.8% over the previous quarter.
The results of the survey go against NAB’s own projection of the market. For instance, the bank expects house prices to remain flat in Brisbane over the next three years. Unit prices, on the other hand, is seen to fall by 4.5% over the next year.
NAB chief economist Alan Oster said Brisbane’s housing market seemed to be going sideways and its unit market still creates concern.
“It hasn’t peaked yet, so that’s good. We’re seeing quite strong economic activity in Queensland, so that always helps,” Oster said, as quoted by The Courier-Mail.
Brisbane Leading the Nation in Property Performance Indicators, But Boom Talk Premature
According to the CoreLogic Daily Home Value Index, Brisbane recorded a 1.2 per cent increase in the median house price for the 12 months to August 2018.
This compared to -5.6 per cent in Sydney, -1.1 per cent in Melbourne and a combined -2.9 per cent for the five capital cities across Australia.
While the results reflect a marked correction in the southern cities of Sydney and Melbourne, the gains in Queensland are being met with equal measures of enthusiasm and scepticism by the broader sector.
The latest BIS Oxford Economics report confirmed Brisbane as a ‘surprise performer’ with expected house price growth of 2- to 3 per cent to 2019-20, before greater growth of six per cent forecast in 2020-21.
BIS’ Residential Property Prospects 2018 to 2021 reports that a current oversupply of dwellings, particularly within the apartment market, will ensure the upside won’t be immediate.
According to PRDnationwide’s Affordable and Liveable Property Guide, Brisbane has proven to be the most affordable and liveable capital city.
Brisbane’s Algester was the standout suburb for both houses and units with the lowest entry price and highest rental yield, combining affordability and liveability given its low entry prices and proximity to supermarkets, parkland, public schools, a medical centre and the motorway.
“Liveability is gaining traction among home buyers and does attract a cost,” the report stated.
But some experts are pouring cold water on talk of a immediate property boom.
Propertyology Head of Research, Simon Pressley, said that the Sunshine State capital continued to post less than stellar results because the wider economy is not doing enough of the heavy lifting.
“Brisbane has some good property market fundamentals, but we have to go way back to 2007 to find the last time that its property market produced double-digit price growth,’ Pressley claims.
“Brisbane’s long-running underachieving property market is a reflection of a city with enormous potential but lacking boldness and a clear direction. Of course, that is not helped by the fact that Queensland had four premiers in just 10 years,” he said.
The situation may be starting to change.
Recent announcements by the State Government to invest $46 billion in major infrastructure projects, including the Cross River Rail, have experts predicting a spike in new job creation.
Economic forecaster Deloitte Access Economics said that the outlook for engineering construction in Queensland is better than it has been for some time.
The State Government’s State Infrastructure Plan (SIP) focuses on a range of infrastructure spending, including $11.6 billion of infrastructure investment to be rolled out in 2018-19, which aims to support up to 38,000 jobs.
This is supported by the Brisbane City Council and the Federal Government’s $944 million investment in Brisbane Metro project which is now fully funded.
Other major projects include Brisbane Airport’s second runway, Queen’s Wharf and the Howard Smith Wharves redevelopment.
Brisbane’s property market leading the nation
BRISBANE is leading the nation in all four property performance indicators for the first time in more than a decade — defying the downturn gripping the other mainland capital cities.
New figures show Brisbane is the only capital city to record an increase in home values over the past week, month, year-to-date and 12 months.
The last time the Queensland capital did that was back in 2007 before the Global Financial Crisis.
While home values in the other mainland capital cities headed south, houses and units in Brisbane gained a third of a per cent in value in the past 28 days, according to property researcher CoreLogic.
Compared to the same time last year, Brisbane home values are 1.2 per cent higher.
The only other capital city to record growth in the past month was Adelaide, where home values inched just 0.1 per cent higher.
The housing downturn is gathering pace in Sydney where values have fallen half a per cent in the past 28 days and are down 5.6 per cent compared to the same time last year.
The Melbourne market is also coming off the boil with home values declining nearly 1 per cent in the past month and 1.1 per cent over the past year.
CoreLogic senior research analyst Cameron Kusher said Brisbane was continuing to record “moderate growth” while the other mainland capitals were slowing.
“The rate of growth in Brisbane is generally slower than it was a year ago, but when you look at migration to Queensland picking up and what’s happening in Sydney and Melbourne, it’s no real surprise that Brisbane is holding up better,” Mr Kusher said.
He said it was likely Brisbane could experience an acceleration in home value growth thanks to increasing migration, an improving local economy and its relative affordability.
But not to the extent seen in Hobart, Sydney and Melbourne in the past.
“I think you’ll see pretty steady growth in the next year or two,” he said.
Unit values in the Brisbane riverside suburb of Tennyson have jumped a whopping 45 per cent in the past year, while Hamilton houses have been the best performers — up nearly 27 per cent in 12 months.
“Generally speaking, it’s the inner city and parts of Logan that doing well in terms of growth,” Mr Kusher said.
“The higher value stock in the inner city is probably attractive to Sydney and Melbourne buyers, and then the growth in Logan City is probably linked to strong first home buyer demand and affordable housing stock.”
Hobart — which is currently the strongest performing market — was not included in the CoreLogic figures, but Mr Kusher said even it was showing signs of growth slowing.
Propertyology head of research and buyer’s agent Simon Pressley said Brisbane’s property market could be performing a lot better, but the local economy was letting the city down.
“Brisbane has some good property market fundamentals, but we have to go way back to
2007 to find the last time that its property market produced double-digit price growth,” Mr Pressley said.
“Coincidentally, that’s also the year that Peter Beattie retired from his post as state premier.”
Mr Pressley said Brisbane lacked significant attractions to draw both national and international visitors, who generally headed straight to the Gold or Sunshine Coast as soon as they arrived.
Brisbane couple Paul James, 29, and Maddie Cant, 30, have just bought their first home in Rochedale, which has been experiencing strong growth in home values.
Mr James said they had been looking for a while and considered themselves lucky to get a three-bedroom house for $530,000 in the suburb.
“It’s a nice area — a growing area, and it’s affordable,” he said.
Selling agent Skye Dutson of Place – Sunnybank said prices in the Rochedale and Rochedale South area had tapered off slightly, but values were still growing in Rochedale South and open homes were still attracting strong numbers.
“Rochedale South is only 20 minutes from the city and you’re still paying affordable prices,” Mrs Dutson said.
“If you wanted to be as close to the city in Sydney and Melbourne, you’re paying millions of dollars.
“I think buyers are taking their time a bit more and just being a little bit more patient.”
In the inner-city suburb of Grange, Helder and Saori Peguicha have just listed their house at 37 Howard Street and are confident it will attract strong interest and a good price based on the capital growth it has achieved.
“With the amount of infrastructure projects on the horizon, I think Brisbane will attract a lot of people for work, so I think there is potential for more growth still,” Mr Peguicha said.
Craig Lea of McGrath Estate Agents – Wilston, who is marketing the property, said he wasn’t surprised Brisbane home values were defying the downturn plaguing other states.
“There’s all this doom and gloom discussion on the basis of Sydney and Melbourne’s protracting market, but that was to be expected,” Mr Lea said.
“Brisbane’s always been a slow boil.
“We’re seeing a lot of migration from the southern states, particularly from expats.”
BRISBANE’S BEST PERFORMING SUBURBS
Suburb Property type Median price Median price change in past 12 mths
Tennyson Unit $1.2m 45%
Rochedale Unit $685,000 35.6%
Hamilton House $1.4985m 26.7%
Sandgate House $732,500 22.1%
Wilston Unit $507,250 20.3%
Bardon Unit $655,000 19.1%
Northgate Unit $417,000 18.3%
Sunnybank House $850,000 17.1%
Seven Hills House $950,000 16.9%
Kangaroo Point House $1.0225m 16.9%
Brisbane housing affordability at tipping point
HOUSING affordability in Brisbane is at a tipping point, with one of the Big Four banks signalling an end to the days of the Queensland capital being a much cheaper alternative to its southern counterparts.
Economists at ANZ believe the river city’s “relative affordability” compared with Sydney and Melbourne has likely reached its peak, with a further 10 per cent peak-to-trough fall in home prices forecast for both cities, while Brisbane prices continue to hold firm.
“We’re not suggesting the median house price in Brisbane is going to exceed Sydney’s, but the gap between the two may be at its peak,” ANZ senior economist Joanne Masters said.
“The connectedness of prices means that the affordability dial is unlikely to continue to shift further in Brisbane’s favour, particularly if there’s a supply-demand mismatch.”
Ms Masters said Brisbane was at risk of becoming a two-speed property market, with the supply of apartments coming on-stream unlikely to satisfy the demand for stand-alone houses from interstate migrants.
That would result in a likely rise in house prices.
“Much of Brisbane’s construction has been aimed at the investor segment, with a prevalence of relatively small apartments,” she said.
“We are now seeing demand rotate from investors to owner-occupiers who typically look for larger homes, which could lead to a mismatch and a two-speed market.”
The latest data from property researcher CoreLogic shows 29 per cent of apartment resales in Brisbane were at a loss in the first quarter of 2018, compared to only 2.2 per cent in Sydney and 10.4 per cent in Melbourne.
The 2016 Census showed nearly 15,000 more people lived in apartments than in 2011 in Brisbane’s centre, and more than 27,000 more lived in one bedroom apartments.
But Propertyology head of research Simon Pressley said he rejected ANZ’s view.
Mr Pressley said Brisbane’s median house price was more affordable than 14 other cities, including several regional cities such as Ballina, Port Macquarie, Shoalhaven and Shellharbour.
“If there’s one major drawcard that Brisbane has it’s housing affordability,” Mr Pressley said.
“Aside from new inner-city apartments, dwelling supply is quite well balanced, it has affordability in spades, and tens of thousands of people are relocating away from Sydney and Melbourne each year.
“The missing ingredients have been private sector job growth, local confidence and modern lifestyle attractions.”
Independent housing analyst Michael Matusik said he did not expect home prices in Brisbane to change much over the next two to three years.
“The economic, political and even social conditions looking forward are very different from the past,” Mr Matusik said.
“There are very few trends that will drive housing prices generically up, and heaps more that will keep them flat at best, but mostly lead to declines.”
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