QLD Brisbane does NOT look good

for units

 

You are correct that unit oversupply will affect rents. It has. And also correct that this will have some impact on house prices too. While most in Brisbane want a house or townhouse not a unit, there is still some transfer across markets. However they are still quite distinct markets and in inner areas we are not seeing price drops on houses. A house and land close to the CBD is the Brisbane standard. And the aussie dream. So national and local demand for that stock type is good.
The price of a house and land in Brisbane is just too good for the 3rd biggest city in Australia and we will see an equalisation. It will take some time, but it will happen.
All of the factors are looking good:
-migration
-recovering economy
-massive game-changing infrastructure. Huge important projects
-long run pricing history

 

Any examples Vish?
I am less optimistic than you about gains on units. I think 3-4 is underestimating how long recovery is going to take for units. And that's on an old one. For someone who got an OTP from about six months ago to back the last few years its going to be a decade before they see any gains (in about the last six - nine months more discounts to realistic prices). As they paid way too much for them. Now the developers are dropping prices.

 

To me the biggest indicator of price growth is demand and in turn demand is generated by a number of reasons. The way I see at present, Brisbane investment advocates only use lifestyle as the main motivator to generate demand. Otherwise I know that compared to Melbourne and Sydney, Brisbane is way behind on wages and employment as well as universities, aged care and infrastructure which are all the main drivers behind generating demand.

But lets consider a couple of scenarios moving forward and hopefully common-sense will prevail.

One scenario is if interest rates stay where they are now (give or take), for the next few years. In this scenario chances are property will also remain the same everywhere. Simply because any correction in the big markets such as Melbourne and Sydney will generate it's own demand. In other words, in the case of a market correction, buyers will still prefer to buy in Melbourne and Sydney that have just become slightly more affordable than they do anywhere else because traditionally these markets led the boom.

Another scenario is if interest rates start going up. This is an interesting one because the main reason behind this scenario is to slow down the economy and inflation. This will hit Brisbane the hadrest for two reasons. One reason is that in a market that is already dealing with higher unemployment and underemployment a slower economy will only amplify the employment problems as companies go into cost-cutting measures. This will in turn feed the second reason that is higher interest rates mean higher rents and higher loan repayments. So from one end you are increasing unemployment and underemployment and from another end you are also increasing the average household payment regardless of whether they are renting or own their place. As is right now, they are dealing with one of the highest commercial office vacancies in their history AND they are having builders go bankrupt. If the economy is as good as they say, then this shouldnt really happen.

In many ways, I view Brisbane as another Perth. Mining was the main driver for the economy in these two cities. When mining went down, Perth, a once hugely popular and expensive place for investment that even gave Sydney a run for it's money got annihilated despite the low interest rates. Sure Brisbane had a slightly more diversified economy and it coped better than Perth did but that was just enough for Brisbane to find it's feet rather than getting too ambitious with the growth rate.

Of course only time will tell but property in Brisbane isn't "cheap", therefore the question is, does it have enough reasons to go up?

To answer your question, I dont think at present there is "a better option" per say and the sole reason for that is that our state and federal politicians, APRA and the reserve bank are too arrogant to make good decisions so anything can happen up to and including Brisbane suddenly doing well for some reason.

My thoughts are safer Vs riskier options and my personal opinion is Western Sydney and in particular around Parramatta area is a pretty safe bet because of the concentration of whats happening in and around the area and what it means for employment, education and other other reasons that generate demand.

 

I am with you. From a risk perspective, I would rather buy one $2M property in Sydney/Melbourne than buy 4 x $500K properties in Brisbane.

 

in terms of quality of universities - way way behind - is not Brisbane fault - just the ppl who manage the universities and schools need to do more to promote etc or consider doing more twining programs JVs etc.

 

We get it, you hate Brisbane blah blah blah. Plenty of people have made good money in Brisbane too. No need to hate so much.

 

I know that complex. 80s all brick. Lots in the complex feels a bit prison-yardy as just concrete and brick everywhere. A couple in the complex are right on the river and have great views not to be built out and would not have lost value. New Farm is relatively resilient (its Bne's most expensive suburb) but the quantity of units in Fortitude Valley, Newstead etc is impacting.

 

No need to be sarcastic and not everything in Sydney will cost $2M neither everything in Brisbane is as low as $500k

Buy as many as you can in Brisbane I am not here to tell you not to

 

I agree, in any case universities are not a huge factor but still if you look at Sydney for example, it does have a sizable foreign student market which generates more demand than most other places.

The case of Melbourne and Syndey is that they have everything needed to generate demand and more importantly they have the big one which is jobs and higher wages.

 

I wasn’t being sarcastic.

My next property transaction in Brisbane is selling. In the next 12 to 18 months, I will be selling $3M to $4M of property.

I am getting out of this town.

 

Would you mind explaining why you are selling in brissie? I have no properties there but happy to learn about the market.

 

Not going to argue about wages etc. but University of Queensland is at least as good as any Sydney based uni. Check the Times Higher Education rankings, list of top business schools internationally etc.

We moved from Melbourne to sunny coast last year partly because of the crazy prices down there, and many people I knew without extended families there did the same thing. If jobs ever pick up in SE qld I imagine a lot of people will follow. When a crapshack in Scumshine or Footscrazy with used needles out the front costs the same as a house with a pool in a good suburb in brisbane why wouldn't you?

 

I am retired. Time to reduce our risk exposure.

 

Cool, understood. Your earlier post seems to imply you are getting out of Brissie property market over others. Is that the case? I haven't been looking at Brissie market closely but have been contemplating Gold Coast market.

 

When you say getting out of this town, does that mean from an investment perspective as opposed to your PPOR?

 

outside of UQ - what else? and if everyone goes there - what about the rest CQU ? of course Melbourne has bad universities too but the likes of Melbourne University, RMIT, Monash, Deaking, Latrobe - seriously - monash clayton itself is what made where 600sqm places were going for 400-500K to 900-1+mil. Tell me how many suburbs in SEQ can do that?

well scumshine and footscrazy are bad but ppl are stil willing to pay 7 figures in some places. Heidleberg West maybe as bad or worst that some parts of logan - but one can sell nearly 7 figures while the other just average growth with multitude of problems. I have got many PMs of horror stories from ppl who had their house vandalised and kicked in, burglaries, rental unpaid for months, chasing up, high insurance, high rates, exp trades to change HWS and some have even sold up or are looking to sell up in SEQ. 2 sides to every story. the floods even though not as significant is enough to ruin and slow down productivity any given day. ppl have be talking boom on SEQ for like years now.

End of the day - goal is to make $$ - there are crap suburbs in Melbourne and Sydney - but they still grow which is what you want. If you wanted lifestyle that is diff question altogether. I could just build a villa in bali or Thailand and get ppl to run around. each to their own.

 

I am certainly a believer in Brisbane. For sure it’s a huge step down from Sydney and Melbourne in terms of being a corporate and financial hub for MNCs, and there is a lack of pretty beaches, harbours and architecture to drool over inside the city limits. So low wages and lack of interesting scenery the first two negative points. The climate is certainly ideal for most of the year yet for many it’s still a boring town with the major attraction being proximity to the gold or sunny coast playgrounds. There are also a couple of other logistical factors I think are holding Brisbane back, though I believe these could lessen over time with proper (and substantial) government investment :

1. General layout of the city is fairly unstructured and random IMO. A proper ring road would be nice. I reckon back in the mid-1800’s Brisbane scored surveyors and town planners that must have got rejected from the southern establishments, or they were permanently sloshed (possibly both). Was discussing this very issue with a mate the other day. He is of limited means but has a couple of properties in our home town, plus bought in Adelaide two years ago and now interested in Launceston, so pretty canny. I asked him why he chose Adelaide over Brisbane. He simply told me he thought Adelaide was a really well-planned city and Brisbane was not – to him it was simply a giant PIA to get around in, and the tunnels are expensive. He hails from Canada where I have to admit all the towns and cities seem to be extremely well laid out. Interesting comment that I since fully concur with, yet it took an outsider’s perspective to point this out to me.

2. Poor public transport options – stemming largely from BCC’s love of busses over the past 50 years. Thanks Clem. For a sprawling city that is warm in summer slow and crowded buses by themselves not a pleasant experience by comparison to what’s on offer in world class cities like Melbourne. Many people may not know that Brisbane actually had an extensive tram system until 20% of the fleet got destroyed by fire in 1962 - this signalled the demise of trams since buses were deemed much more cost-effective. But now our tiny roads are fully clogged I think Brisbane is gonna need to push through with a) Light Rail Metro plans and b) Cross River Rail unless Driverless pods save the day in 10 years time. These will both cost an absolute bomb but woeful public transport is definitely holding Brisbane back as a place to enjoy, unless you are smart enough or lucky enough to take advantage of the electric train network.

Anyhow these are my personal views only of course. Brisbane is unique and great but in a global sense it falls short in a few areas that stop it from being absolutely fabulous. Still think it will trundle along okay from a house investment perspective though if you are choosy on location. Sorry for the long post.

 

Brissie does not look good... until they do something like this:

South Australia appoints Chinese actor as face of tourism | Daily Mail Online

Frankly not such a bad tactic

 

It's. Excellent for Australian tourism in general. And. Will have positive impact on other states.