Brisbane apartment market has gone through very rough times, but it is now on the verge of a major recovery.
This recovery prediction considers the facts that housing values in Brisbane have not suffered nearly the same pain as the unit market has and that the underlying driver is a steady growth in the QLD Economy, and more specifically in its capital. Brisbane’s economy is well-diversified, and it is propelling income growth and apartment growth in the next years. The reality is that Brisbane is not experiencing anything like the acute corrections forecasted for Sydney.
In the same page as the Moody’s Analytics expert is Tim Lawless, Head of Research for Corelogic, who points out that Brisbane’s recovery has been a long time coming. Brisbane is displaying great resilience, partly thanks to showing sustainable growth rates over the past decade. The reality is that the same wealth creation effect has not been mirrored by Sydney or Melbourne, and now the two cities are leading a national downturn of the housing market, while Brisbane is not showing the same trend.
Moody’s Analytics also predicted a downward correction of the housing market in Victoria and New South Wales all through 2018 and most of 2019, on the back of tighter credit conditions, slower income growth and exponential overpricing of housing supply.
The renaissance of the Brisbane unit market can be analysed with these seven key drivers:
Traditionally, Queensland usually had a stronger population growth that the rest of Australia, but due to the mining boom crisis, from the year 2013 has been experiencing a dramatic drop in its growth. Happily, this trend is starting to turn around and QLD is seeing a large flow of population attracted by sky-high property prices in the southern states, a strong economy and a healthy job market in Queensland.
Economy and Job Growth.
The economy in Queensland struggled when the mining boom came to an abrupt halt. But we have seen a rebound in the economic growth, and Queensland is expected to grow at a very healthy 3.4% for 2018 and 2019 according to Deloitte Access Economics. Queensland has now enjoyed seven consecutive quarters of positive growth in business investment, coming from suffering eleven quarters of negative growth.
Supply of New Apartments.
Apartment completions are set to decrease dramatically in 2018 in inner-city Brisbane, according to Urbis. Three Bedroom apartments are already in severe undersupply in the inner city, and there is a very real chance that the whole unit market will be in undersupply by 2020 and beyond.
Quality of New Apartments.
Developers are now extremely competitive amongst themselves, they are looking to convince a much smaller pool of investors, and therefore they need to make sure that their product offering holds the best quality standards when compared with other properties in a similar price band.
Relative affordability to Melbourne and Sydney.
Median apartment value in Brisbane is only 5% higher than it was ten years ago, while the two southern cities have experienced a growth of 88% in Sydney and 53% in Melbourne in the same period. This means that, while the compared value of a median apartment in Brisbane in 2008 was 90% of the median price in Sydney and 98% of the same in Melbourne, now the median price of an apartment in Brisbane is only 50% of what is costs in Sydney and 67% of the same median price in Melbourne.
Brisbane is the best placed of any of the east coast cities to face the effects of rising interest rates, thanks to a household income that is virtually the same that Melbourne’s and a close 88% to Sydney’s, but with a significantly lower average mortgage size in comparison.
Reason dictates that sentiment and market should be closely aligned, but, this is not the case, sentiment is often guided by media that sometimes has little if any concrete evidence behind opinions loosely based in partial, and even incorrect, data analysis. In recent times, mainstream media has shown a focus in bashing the Brisbane unit market. There is optimism that this media trend is going to change in the next months, based on the other positive points stated before, but also on the increasing attention of the media in the property markets in Sydney and Melbourne.
Data and information from:
news.com.au (Brisbane housing market ‘doing a Bradbury’ with house and unit values set to rise)
The Urban Developer (Brisbane Apartment Market at ‘Turning Point’)
The Urban Developer (Sunny Skies for Brisbane Apartment Market)
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