Have I Missed The Brisbane Property Boat? (The Answer Might Not Be What You Think)
The property market is wild right now, the media is constantly saying how growth is off the charts and homes are becoming more and more unaffordable. So naturally, one of the main questions we get asked at the moment is “have I missed the boat on buying a property in Brisbane?” And we believe that, no, that’s not the case.
Plenty of Room to Grow
If you ask us, there’s still plenty of growth to happen. When you consider the last 10 years of Brisbane and Southeast Queensland’s growth, it’s been quite moderate, single-digit annual growth rate, as opposed to Sydney and Melbourne that frequently enjoyed double-digit growth on a couple of annual bases.
And when you look at Brisbane’s median house price and Southeast Queensland’s median house price compared to that of Sydney and Melbourne, we think the value proposition that still exists here in Southeast Queensland will continue to drive prices forward.
The Value Proposition
We had a conversation recently with a client who was living in a three-bedroom apartment in Sydney, worth approximately 1.7-1.8 million.
That person could sell that property, move to Queensland, buy a near-new or fully renovated, four, five-bed, two bath, 600 square meter block of land, in a nice suburban area, and probably have a lesser mortgage than they had down in Sydney or Melbourne.
So, for as long as that value proposition exists, we think Brisbane and Southeast Queensland, more generally, have quite a positive growth outlook.
If we were to crystal ball the future, Brisbane’s got another 12-18 months of consistent growth moving forward at this pace, or at least very similar to this pace. Then we’ll probably see a plateau where prices will flatline. Outer areas which have been historically volatile may see a little bit of slipping back in value, but the core inner and middle ring areas, we believe, will sustain prices.
Sustainable Prices and Low-Interest Rates
The drivers of those sustained prices will be interstate migration and local homeowners purchasing. And while there is speculation about rising interest rates affecting price growth and subduing buyer demand, we don’t believe that will be the case. If you look at the market and where interest rates are at, they are still surprisingly low in comparison to historic averages.
We’ve been in a very, very low-interest-rate environment where you could get 1.8-2.5%, and that may be changing now back to 3 or 3.5, maybe 4%. That’s still a lot lower than what people were paying 10 or 15 years ago when rates were upwards of 7, 8, 9%, or back in the ’80s when they were in their teens.
We think that prices will still be sustainable even with an increase in interest rates. And as long as there’s that value proposition, and as long as there are people in the marketplace looking to relocate to Southeast Queensland, we are confident that we’re going to see that positive outlook.
The 2032 Olympic Games
We can expect 12-18 months of continued growth, followed by a bit of a flat time. But then, we’ve got the stimulus of the Olympic Games. Just think about all the brand new infrastructure, the marketing, and the hype that these games are going to bring. The next 10 years are an exciting time of change in Brisbane, and we believe all this activity and energy will bring another resurgence of value to the city.
That’s why, even more so now, if you’re purchasing a property you must maintain a long-term outlook, as you should with any property investment. Plan for that 10, 15-year hold, and you’ll be amazed at what happens.
If you stick to the fundamentals and purchase quality property at a fair price, I think you’ll be a very happy owner.
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