QLD Brisbane or Perth??

Hi All,

I'm looking at buying an IP around the $550k mark in either Brisbane or Perth before the end of the year.

I'm looking at houses/villas rather than apartments.

I'm interested to see which of these cities the PC community think will experience the best growth over the next 10 years?

Cheers,

Nikki

 

For that price point, Brisbane.

 

I'mm no expert in Brisbane but there are definitely some ripper deals in Perth right now. The real opportunity is that you can still buy so far below fair market value. You can buy houses on triplex/quadlpex development sites that are obtaining >4% gross yield from the existing single dwelling. Buy, hold, then develop if you want or on-sell when developer demand returns.

Overall though I think Perth will see a 2 speed market. Historically there has been a lot of money in FIFO, construction, and non-city based roles that have meant newer suburban houses can command equal money to inner city stuff. this started to change since the 2007 peak - my folks sold their suburban house and picked up a house 6km from the cbd and have seen 40% growth since then. meanwhile their old suburban house is the exact same price as it was 10 years ago.

This change will continue. Prime central land is still only valued at around $2,000/sqm (generally even with a house) and bluechip suburban land can be found for as low as $1,200/sqm. Compared to the cost of outer suburban development land, the difference is far too narrow IMO. so I vote Perth with the caveat that you need to select well. I have no doubt that there are other properties in Perth that will see very limited growth in the foreseeable future, but that same sentiment is causing a lot of people to overlook genuine opportunities. Find these, and buy them below value, and when demand returns, sell it to someone who wished they'd got in earlier.

Final note on development, WA approvals have bottomed for 3 months now, so resi construction has definitely found its floor.

 

Brisbane as it's on the early stage of recovery and diversified economy
Perth will take some more time till mining recovers
For 10 yrs both should do well
Since you are a Perth resident it makes more sense to go for Perth as you know the different markets extensively good luck

 

Brisbane out of those 2 for sure. Much better potential in the short/medium term than Perth.

 

I also believe that you'll most likely see greater value growth in Brisbane over the next year, maybe two, than Perth. The area has momentum from the positive sentiment of the Commonwealth games next year. Growth may not be like it's been the last two years, but I believe there will still be some left until after the games.

I wouldnt underestimate the APRA changes. Many invested in SEQ believe it's already influencing the market, and I feel I'm seeing it too on the northern Gold Coast.

I wish you luck with whatever you decide to do

 

brisbane not only has better current fundamentals, but is heading in a better direction than perth.
Yet..on average perth is more expensive than brisbane.
Doesnt seem much of a question to me.

 

Looks like we have a winner then!

 

Woooo! Everyone invest in Brisbane, we're the best!

 

If you can time the market then Brisbane, if not for long term hold Perth, simply because you are buying in a market that is at the bottom. Brisbane had some healthy growth already, this may very well be the peak or may be it has some more steam left.

 

Disagree and my view would be opposite.
Long term hold - Brisbane
Time the market with a view of shorter term hold - pimp and flip - Perth.
I say that because :
1 Brisbane has better fundamentals especially jobs (variety, amount etc)compared to Perth
2 Brisbane is heading in the right CG accretive direction compared to Perth eg the developments Brisbane has going on will add cg, I don't see that scale in Perth.
3. Brisbane has made it clear that it wants to compete with Mel/Sydney in the future and not Perth/Adelaide (as it has in the past). It is moving in that direction. This is a maturation process. It's slowly but surely outgrowing it's country town boots.

The above main reasons ensure imo that Brisbane has more gas in the tank cg wise long term say 20 years than the next 2-3 years.
Although it may outperform Perth in the next 2-3 years ..dunno about 10~15 years.mYbe Perth....but after 20 years.. Brisbane will be more developed and mature and will be seen as a viable competitor to current Mexican dominance.
Perth will not. Neither will Adelaide. Buy now in Brisbane to ensure you get the maximum cg in the near future and also the long term. In the long term, it will exhibit numbers that put Sydney and Mel to shame. Position yourself accordingly.

 

Out of interest, what do you define as fundamentals?

 

Everyone has a slightly different view.. Here is a decent write up
YIP mobile

..I would define it broadly as that which impacts supply and demand - especially demand side of the equation.
Mostly in my view..the biggest part of fundamentals is jobs, jobs, and more jibs - size, variety, type (pt vs ft vs contract) etc etc..also salaries those jobs pay, and wage growth.
Something is if course better than nothing when it comes to jobs..but really, you would want the high skilled high paying ones..
Currently, Mexico dominates that scene and has left the rest of the country to rely on cyclical activity. Brisbane wants a larger piece of that be a viable competitor to Mexico for those jobs. It's making progress, although a bit slow.
Perth and Adelaide - not ad much.

 

Under the assumptions that Perth won't diversify? Perth is most certainly waking up to the side effects of resource boom dependency. Queensland also has many more choices than just Brisbane. Gold coast, Sunshine coast and so much land in between. All within 1 to 1.5 hour from Brisbane. So it has more "usable" land supply unlike Perth where there is so much land but with aggressive infills and lack of infrastructure to the outer burbs will keep the demand high for core-Perth in the medium and long terms.

To answer OPs question about buying right now. Brisbane properties are going for a premium where Perth propeties are going for a bargain so why not start with Perth and when the cycle turns in Brisbane, can buy in Brisbane later.

 

TBH the time period for capital growth in Perth is going to be alot longer than Brisbane in the current climate of both cities. Lets not beat around the bush here - you get rich with capital gains. Thats how you become a millionaire. So only for that aspect Brisbane is the better option.

 

Not sure I agree. Try as it might Brisbane will never steal the mantle from Sydney...jobs or no jobs. There's a reason why Syd is prohibitively expensive.

But Brisbane is coming off a lower base..that I agree with you.

 

The only sure way to have CG is buying a bargain. Paying premium prices in hope of CG is not. I am not against Brisbane, just saying that prices have gone up quite a bit in the last few years and is not necessarily the best time to enter Brisbane market. The smart people have already bought there a few years ago and riding the slow-wave up. Let's face it. Brissie is no Sydney or Melbourne. There may not be a bang-boom like in Sydney or Melbourne. In fact I don't know if Brisbane ever had such a thing? Perth did more than once in the last 20 years.

 

That is your conclusion. I myself have put about 1 million in the last 12 months into Brisbane market that's how confident I am in it. Like any investment you cant just buy anything without researching and due diligence.

All my houses are positive geared and ALL of my Brisbane houses in the last 12 months have increased in capital gain. I don't think Perth would have provided anywhere near that growth I have already had in Brisbane.

Smart people was still playing the Sydney market a few years ago. There was still big gains to be made in Sydney 2 years ago - now not so much hence you see the influx of Sydney investors into the Brisbane market like myself.

Anyway lets see. I'll bet all my properties in Brisbane/Logan/Ipswich will double in value within 5 -10 years. Perth I cannot see doing that in that time frame.

 

I really don't see brisbane as anything exceptional. It has a state debt not too far from WA, it is set to loose from any GST reform (and WA will significantly gain), its economy is heavily reliant on coal, which has arguably passed its economic peak, and gas and tourism are going to be its leading edges. It is coming off a construction peak, with activity in the sector set to fall.

Perth is passing its development approvals trough, so construction is only going up from here. WA has the world's largest reserves of lithium and considerable copper, both essential for any true reform in the energy or transport industries. It is the worlds lowest cost iron ore producer. none of those industries are going any time soon. and much like QLD, it has considerable gas reserves.

I really don't see any validity in the argument that long term, Brisbane has some edge on Perth. IMO no one can reliably forecast that far out, but on economic merit, both cities have their perks. People who expect mining boom 2.0 will be disappointed in either city, but both have decent futures ahead (sorry Adelaide fans, i can't say i believe the same for you).

What i do see is that Brisbane has had the eye of speculative investors for some time, so prices never troughed as much as they should/could have. Perth however became enemy of the nation, so many properties are significantly under-valued right now. it has the fastest-shrinking residential supply market in Australia and is seeing rapid contraction in the historically slowest time of the year. WA has the highest rate of jobs growth this year, and in general, I agree with @JohnPropChat that capital gains is about the bargain, and Perth is the city that is delivering right now. pick well and you'll do ok in either city, but personally i would pick perth. Bias because i know the market better, but i'd be happy to take that risk.

 

I agree. Only time will tell but I was responding to OP's long term hold prospects. Not just next 5 years, which is timing the market. Great if you get in and get out at the right time, if not ...