2020+ Melb/Syd to outperform Brisbane again?

Hi all,

Like a lot of others on here I have been reading the hype and eyeing off Brisbane for another investment property. I currently have a few properties in Melbourne and looking to diversify. Most real estate articles are predicting Melbourne and Sydney to bounce back to previous highs over the next year or two. The prices are mostly still a discount from the 2017 highs. Is anyone else now considering Melbourne/Sydney over Brisbane? If so what suburbs do you think will bounce back the hardest? I am ready to buy in the 500-600k range. Interested to see the discussion on this.. I think there is a lot of potential in Brisbane but it may be a few years off still..

"Sydney and Melbourne is predicted to see growth of 7 per cent or more in the next year and the year after, with Brisbane, Adelaide and the ACT also set for positive growth.

Meanwhile, Darwin, Perth and Tasmania and the NT will see some dips either in 2020 or 2021"

Here’s where Australian property prices are going in 2020

 

Personally I cant see prices continuing upward in Syd/Melb from mid to late next year onwards. I think Q2/3 we will start to see a different market. Something has to give as wage growth is not following anywhere near the same rate.
Brisbane and Perth will benefit from those priced out of Syd/Melb, I think Perth is likely to bottom out Q1/Q2. Inner-Ring stock is already moving fast.
I don't really look at the other states.

 

Sydney and Melbourne may well out perform for this and / or next year , but they are at the top of their cycles ( or close to it ) while Brisbane is close to the bottom of its cycle.

I invest for the next 5-10 years and in that time frame , I'll be stunned if Sydney / Melbourne out perform Brisbane .

BTW , the forecasters rarely if ever get it right

Cliff

 

Probably yes Sydney and Mel will show better cap growth than brisbane in 2020. That's just one year. Are you thinking of buying and flipping the same property in 1 year? If you are then Sydney and Mel will definately be the main viable markets in which to do that.
Brisbane is a long term proposition. It does not nearly have the demand or supply characteristics of Sydney and Mel to do that easily as you could there.
Over many years, yes it will and it is a maturation process. Have to trust that brisbane will eventually get to where it needs to be but realise that it isn't going to be anytime soon. It's a slow and steady process.

 

Wages are stagnant however,
- Interest rates are lower
- Taxes are going to be cut over the next 4-5 years I believe (2021-2024)
- Helicopter money is here and ready for more

What this means is prices in Melb and Sydney will be going up for a number of years

We are at the end of the mid cycle slow down and revving back up into gear faster then expected due to all the stimulus. I would be shocked if by 2024-5 Melb/Syd markets are not 50% higher then today.
All my personal opinion

 

Perth anyone?? Just joking

 

Bargain PPOR upgrades within 5-10km ring

 

Agree
I am looking at downsizing inner city

 

bargain because they are cheap or bargains because you think they will rise?

 

Cheap but some are likely to do well in the medium term (10-15 years). The value-add options can create equity rather quickly and easily in certain pockets.

 

With so little stock on the market in inner Melbourne and 50 people interested in one house where supply is low, I think you could get some great growth in suburbs such as balaclava Elwood etc in the next year.

 

Hi Cliff,

I know you're the macro cycle guru but lets pin this prediction. I personally think Sydney and Melbourne will outperform Brisbane in the next 5-10. They're the two international cities in Australia and a lot of business is headquartered in both. There's a reason their means are higher than other cities in Aus and its that reason that will continue to see them outperform the other majors.

I'd love to be proved wrong. My next investments will be in Brisbane. But I can't see Brisbane or Perth shaking off their small town funk. Brisbane might with all the investment that's happening at the moment with Casinos and the like but I still suspect Syd/Mel will outperform.

Cheers,
Michael

 

I like Brisbane for what is it, a generally very stable market which offers opportunites to add value and manufacutre profits, regardless of how CG plays out.

 

Yes I would agree with this.
Sure there are lower interest rates and wages have been stagnant across the board etc...but this hasn't really sparked brisbane rally over syd/Mel in the last 6 months, and I cannot see this changing in the next 12 months either.
If interest rates are cut further in thr future, sydney abd mel will benefit more than brisbane will, just as it has done last 6 months. Brisbane has a fair amount of supply (almost all types of dwellings) and lower demand (specially due to lack of high paying corporate jobs) and this supply:demand ratio will improve in brisbane no doubt (and thus higher house prices to match), but it's a slow and steady process. There is just way to much supply and not enough strong jobs drivers to warrant any superior performance over sydney/Mel.

 

good point for the less passive style investors

at the moment investing in melb and sydney is a bit like heading off to the roulette table

forget about making money on any projects unless the market rises

in the smaller ponds you can see what your profit is without relying on capital growth during the project

there would be people investing in melb and syd who can make GOOD money (not talking 15-20% before your costs run 10% over...) without growth but these people are very big fish

 

For me I look at each state differently, then determine what strategies I can use which has a decent chance to yield good results in that state and particular markets. Broadly speaking these strategies are on my mind:

Sydney: buy and hold ( yes) , houses or units ( yes) add value ( yes) , up to 50km from the CBD ( yes) , Reno and hold ( yes), Reno and flip ( yes), OO and investor stock ( yes)

Melbourne: buy and hold ( yes) , houses only ( yes) add value ( yes) , up to 20km from the CBD ( yes) , Reno and hold ( yes), flip properties ( yes), OO stock only

Brisbane: add value and hold ( yes) upto 12km from CBD ( yes) , add value and sell ( yes) houses only. OO stock only.

 

I agree. Explosive growth in Sydney and Melbourne for the next 5 years.

 

Beating a dead horse me thinks.

 

I have no idea but..

 

I certainly hope not , that would make them even more overpriced by international standards in terms of property price relative to income .