QLD Brisbane on the ground

Just thought I would share some observations from my very recent visits to the Brisbane market. I was there last weekend and another 3 days this week including this Saturday. These were mixed purpose visits but I went to 20+ open houses and spoke to probably as many agents in the process.

In summary, I didn't see much to change my overall opinion of Brisbane i.e. it's not going to follow Sydney or even no where closer.

Mount Gravatt East/Mansfied/Wishart - I was expecting a lot of buyer competition in these suburbs as they have great schools and recent history of reasonable growth over last 3-4 years. On some opens, I was the only one who had shown up. These suburbs do show some good sales in last 3-4 months which explains high seller expectations in general but there seems little or no buyer interest at current $600k+ prices. Don't get wrong - even these prices seem like a huge bargain when comparing with similar Sydney suburbs but local buyer affordability seems to be bad. Having said that a reasonably priced, well located house still seemed to be selling okay.

Moorooka - Dampening demand and some seller desperation. Agents were happy to take lowball offers to the vendor. Again very few buyers during the inspections. Many places listed as auctions but next to empty open houses. Nonetheless very nice area and I think Moorooka has very good long term potential. There are oversupply fears though and apparently small townhouse developer type buyer is no longer driving up the prices.

Bracken Ridge/Strathpine - Given all the hype around these suburbs on the forums, I decided to check out these suburbs but only went to 3 inspections - 2 of the agents were happy to arrange a viewing in the evening and one was scheduled a bit late so I was able to finish the good suburbs first and then take the slightly long drive out. Based on what I saw, I think these areas are a very long shot if you are looking for mid term growth. Demographics and general outlook of the area didn't feel great. For Strathpine sort of areas to significantly grow, Inner Brisbane ring will have to do even better than Sydney.

Overall, Brisbane still seems like a depressed market with poor buyer affordability. I routinely see more buyers at one open in Sydney than may be combined from 20+ opens in Brisbane. But for a Sydney based investor, areas like Moorooka do seem very attractive and I am encouraged by what I saw. Post Christmas, I am thinking of getting a bit more closer to CBD and look for opportunities. Any recommendations on suburbs?

Hope this is useful for people looking for an independent scoop on Brisbane.

 

...and I am happy to buy in such a market condition.

Your observation of Brisbane now is probably Sydney 2009-2012. I would be more than happy to buy Sydney in these period rather than competing with a group of 20 in the last few years and negotiating prices 'over and above'..

 

The comparisons you make and the preferences you state are really only valid for your situation, personal circumstances and goals. You seem to be focused on growth - which is fine if that is your strategy and you can bankroll this strategy.

Investors in the inner ring are chasing capital growth at the expense of yield and are working with a much larger budget. Investors in outer areas like Strathpine and Logan have yield and cashflow as a key part of their strategy and are purchasing at a much lower price point. The all important serviceability considerations also come into it for many investors.

I like the areas closer to Brisbane but I didn't want to stretch my budget to buy in those areas at the expense of yield/cashflow. I chose not to invest in other parts of Moreton Bay ( Redcliffe/Margate/Clontarff) for the same reason.

 

Move in a little Closer say holland park west, camp hill, Seven Hills, Norman park and competition is fierce for Add Value stock . Brisbane up to 12km from cbd had good growth over last 2 years and now the inner ring surburbs are continuing to grow while some of the middle ring surburbs are slowing . It's all about time frame but if you want to make good money in the short term then it has to be add value deals . Building industry there is really heating up. Just my observations .

 

We work very closely with clients buying in Brisbane - both those using a BA and those who don't - and the competition is varied depending on the areas. Those exact suburbs that Leo2413 listed above are definitely in competition territory. The areas towards the north along the train line are getting plenty of investor interest with more competition than in the last two years. I don't think it'll ever be the new Sydney but as the economy improves we can expect to see some upward pressure and right now, it's still at a fantastic point for price and yield.

As wombat777 said, it needs to be taken in context with one's overall strategy. I also chose not to invest in parts of the Moreton Bay for the same reason and preferred Rothwell and Kippa Ring. Even those areas are very different price wise to what they were a year ago which is why investors are now pushing up towards Deception Bay. For those looking to invest in North Lakes, beware of the cookie cutter 4,2,2s which are abundant there. If you're not inspecting yourself before you buy, make that an important consideration.

- Andrew

 

I agree - it felt exactly that way.

 

Some good observations, however I wouldn't read into the fact that you see more people at one Sydney open than 20 Brisbane combined. Fact is it is a different market, auctions not as prevalent in Bris and Syd or Melb, many auction listings are sold prior to.

Just be careful in drawing correlations between Syd/melb and Bris..

 

Agree - I am generally a value investor but yields aren't bad anywhere in Brisbane. I think it's a balance one needs to strike in the end. My Sydney portfolio was built on yields but it's the capital gains that have allowed further expansion. With falling rents, oversupply fears and not so much happening on the economic front for Brisbane, a yield only strategy can put brakes on your growth for many years if market doesn't bail you out.

 

Agree - very different markets. Among other things, very friendly RE agents.

 

Agree - middle ring seemed to have run out of steam but you could see the signs of a recent boom e.g. mismatch in seller expectations etc..

 

Absolutely suburbs further from the cbd are slower. In Bne 20km out is considered reasonably far and the demand is not as diverse.
Coming in closer to the cbd I would recommend Lutwyche, Kedron, Windsor, Nundah etc. Chermside of course still has good deals medium long term a very strategic hub..
For solid interest and confident sales come to some opens/auctions in Paddington, New Farm, West End. Expensive suburbs but you are going to see multiple parties of a diverse demographic buying houses quickly that often have no value add potential (except sometimes adding even more 'class' to the single building itself) due to tiny land sizes. Its about location to the river, cbd, cafes for them but still snagging a detached dwelling.
As someone mentioned before, going further out is where the better yields are so in Brisbane it's about that sweet spot where you still have the professional demand and where the renovation money flows in but that is still not too unaffordable. Inner ring up to 10 kilometres north seems to be having consistent decent movement and meets this criteria. Safe, family neighborhoods. No explosion, but properties are selling and the demographic is of a renovator type.
Red Hill, Kelvin Grove for example now taking those pushed out of Paddington and achieving great prices. Suburbs filled with post war homes on 600m2 including ex housing commission around the 7 to 12 kilometre North ring are all being nicely done up. Lots of potential. A weatherboard post-war can be turned into an amazing house because they are so easy to work with and very easy to add a lot of class.
Absolutely agree stay away from the brick houses that are further out unless it's really about some kind of land potential.
I was in Strathpine yesterday also and I can understand coming from Sydney it's going to seem like you're fairly far 'West' and quiet. Having said that, Strathpine has changed immensely in the last 5-10 years. The mall that is the anchor near to the train station is bigger, has classier shops and the demographic has changed. I know the area very well and I can see that it's come along. I don't see any reason why that movement and social change won't continue to occur as first home buyers professionals move outwards from the city along the train line. For the price you pay and the rent that you get its a good option. It wasn't that long ago I was going to Chermside Mall regularly (covered in paint and dirt and in a singlet) and it felt like what Strathpine mall feels like now (but bigger). Now Chermside Mall everybody's consciously dressing up to go there (and that's prior to this huge reno/expansion).

I'm optimistic about Bne if you buy the right stock. It's not actually that far from Sydney and people are working out what that there is lifestyle opportunity here given the amenity isn't so much less anymore but the prices are so much better.

 

Me too. Very optimistic. Personally I think the 'right ' stock doesn't always match a person's buying criteria/finance/risk profile so it's often dismissed simply because it's not possible for certain investors to buy given those constraints .

 

Are you talking about the price of splitter blocks/thouse development sites in the inner ring? Tell us more about this observation @Leo2413

 

I would rather prefer to not get into the specifics as i am still actively buying in those markets . Safe to say add value deals in inner ring surburbs .

 

Excellent post - probably one of the most useful ones on Brisbane. Thanks for sharing insights.

 

Thank you so much for your compliment I think I know Brisbane pretty well.
People meet me irl prob get sick of my talk about demographics and development, renovations, suburb comparisons, town planning issues.
Brisbane is an interesting subject because it's small enough to see the impact of quite radical change that's happening now but still stay on top of what's going on across most of South East Queensland generally. Syd / Melb are already major cities.
Bne has only just now become big enough to have some pretty awesome projects such as Queens Wharf - it's going to be an incredible transformation.
It's a great place here that's a little too overlooked atm (except on PC).

 

THanks for your posts

Must say that it is not my experience, but I attend only a few select opens in select suburbs most weekends

Overpriced stock isn't selling quickly
Auctions still don't sell for what they are worth

 

Absolutely - One house that I came close to making an offer on presented such great value & lifestyle that it would be my dream PPOR if it was in Sydney but easily 1/3rd of the price.

You seem to have an impressive knowledge and this is what matters in the end. What do you think about the suburbs between Carina westfield and Garden city westfield? I saw a lot of Asian crowd in Garden city westfield and that's generally a good news from Sydney experience.

 

Not sure if you are agreeing/disagreeing with me

 

Most opens I'm going to have between 20-30 people through. I've posted about these recently. Just not sure what you were inspecting

Good priced stock is selling quickly. We couldn't even get to the inspection of a property last week before multiple offers were made and it sold 400k above asking (Coorparoo).