QLD Could Brisbane Take Over As The Best Performing Capital City Housing Market In 5 Years?

Depends on your definitions of inner and middle rings. Things have changed so much in the last 20 years so inner should be within 7 kms of CBD, middle should be 8-15 kms and outer should be 16 kms or more.

 

It's good that you state your burbs when referring to inner/outer/take a packed lunch burbs.

 

My take is that I thought we would have seen the Brisbane market move ahead by now.
The fact that it hasn't (in a boom way - yes some ok growth in inner ring) to me indicates even more that it is the best place to invest right now. Its overdue for a run. Perhaps simplistic but when I see how over the long run all capitals rise by the same amount then it confirms that BNE has some catching up to do. Big projects in the pipeline means the future is looking quite different for Brisbane.

 

they will be the last to rise (as they are the first to fall). That's what I have seen in the BNE cycles.

 

The biggest problem is jobs imho. That's more influential than the banks. Booms don't come off investors. Otherwise Logan would be double the price of New Farm after a few cycles.

 

Petrie/Kallangur have had a good run in the last 18mths due to Uni speculation. Its going to be a while before anything much emerges out there. I did post some inside information on that a while back. Its a very small uni that's going to take a while to get numbers. Its a long term game.
Redcliffe Kippa Ring etc got a kick from the trainline.
I speculate they are now settled down to where they should sit considering distance and the CGs moving forward will reflect that (less than inner city areas).
Good areas to have bought in though. I still think about that deal you got on that Redcliffe house Taku.

 

The better strategy if you can afford it.

 

when is Sydney coming back @sash ? must be 2023?

 

only a couple of 'floodies'

 

That's a good point. People who have more serviceability challenges really need to be able to focus on ripple suburbs, add value renos and find the next 'hot spot' while its cheap(ish). I don't envy the challenges they will have.

 

Been saying that for several years now .... meaning cash flow + debt reduction is king.

#aheadofthecurvesincebeforeAPRA

 

Add 5 years to that. More if significant PPOR debt reduction doesnt occur and significant wage growth doesnt occur.

You've got to remember that for every $1million owed now (which is an easy level to reach with just 1 x PPOR mortgage and 1 x INV mortgage in Sydney) , its like a 50-60K NET pay cut on a servicing calc when you consider HEM's than now track CPI, and senistised P&I assessment rates. Its worse if you have taken 5 years IO on the INV debt. It's worse again if you have taken 10 years IO.

So when considering the next Sydney "cycle" - or any future growth cycle really, ask yourself how long its going to take the median double income householdwith $1 million of debt to secure 50-60K of extra NET income... which is like 80-90K of GROSS income. Thats whats required for their pre APRA capacity to be restored. Not improved...just restored. Will it be 2023? Doubt it. 2028...? If they work on debt reduction and get some solid pay rises.... if they dont...could be 2033.

 

Believe me, I have been listening.... and taking action.

 

Yeee haa - all to logan for cashflow !! @sash

 

If you read state of the states report, QLD in general is well behind the nation.

They currently have a massive apartment over-supply issue coupled with a not so good economy compared to the rest of the nation.

The way I see Brisbane having any significant capital growth within the next 10 years is ONLY IF commodity prices return to their 2009 (or close to) prices.

In that scenario if you have not bought in Brisbane, you still have the option to buy as property prices will lag commodity prices by 6 months to a year any way. You may not make as much as people already owning properties there but you are not exposed to any risk either meaning your investment comes with 0% risk and a significant return.

For now though, I wouldnt tie up money in Brisbane, there is really no other reason for this place to go up and State of the States was the proof of that.

 

I would suggest it quite possible the APRA changes would be reversed or altered before the income rises enough.

 

You may be right... but its unlikely in my view

I would certainly agree there is some chance that some of the policies banks have used to meet the APRA guidelines will be softened. For example, IO terms may start being available for more than 5 years. Pricing spreads between P&I and IO may close from current levels.... those kinds of things. But I would suggest it's almost buckleys and none that we are going back to pre APRA living costs and "actuals" .... in other words its unlikely borrowing capacity is going to explode again anytime soon...

I follow the APRA chairmans comments very carefully - when he talks about no additional intervention being required but more work to be done around living expenses and then plenty of continued vigilance required to see these settings become second nature to lenders, I dont think he means APRA's work is done and they're going to move on to other things and let the banks creep back to what they used to do. And when he talks about debt to income ratios still being uncomfortably high compared to nations who suffered extreme GFC house corrections.... it tells me that yes, the worst is over as far as regulatory intervention... and very likely APRA now considers it has done enough to start correcting the banks P&I v IO imbalance.... but relaxation or reversal isnt anywhere on the horizon. reinforcement and diligent supervision is. This is now the beginning of consolidation phase. APRA will move from intervention to reinforcement /monitoring. After all, they are trying to engineer an orderly, soft migration of IO to P&I.... it will take years ( perhaps a decade) , not months.

So I'd be planning for this being the way its going to stay for a looooong time, and for servicing calcs to stay like this , and I'd be recalibrating cash flows within a portfolio as required.

Cant bake the same cake using different ingredients.

 

Based on last time...the market went off the boiler in 2004...it did not pick up till about 2011/2012.

Based on that ....the market went off the boil in 2017....so based on similar basis 2024/2025 is when Sydney will grow again .....

 

Yes I am familiar with that long flat period. But that was before China (and overall more international money generally) was in the game. Do you think that has implications? Isnt a new millionaire created in china every 5 minutes or something?

 

Hope this is right, but I suspect previous cycles will recur at much longer intervals in future. The servicing calc changes are just too significant for previous cycles to be repeated at the same speed/intervals. Even those who havent reached their ceilings yet will be affected as they'll reach them far sooner.

I look at it like this. All previous cycles occurred during a period where capacity was never really exhausted. A rate cut or two always provided extra borrowing power due to "actuals" being an active policy at many lenders. Thats not going to be repeated moving forward, and even large pay rises arent going to drive increased borrowing power for most, unless they are extremely large. It will require a combination of increased income ( salary, rent etc) + reduced debt for any momentum to start up again.... and thats going to require a decade or so at current rates of wage inflation and current debt levels. Thats why I call this the decade to deleverage....

Hope Im wrong... but the maths are the maths.