Poll: Where will outperform over next ten years – Brisbane or Sydney?

Following on from a discussion in another thread, I was playing around with the historical growth for Brisbane and Sydney. Some of you will have seen this chart floating around previously:


It shows the annual change in median prices for the capitals since 1970. It shows that that at different points in time certain areas are booming and others are flat ordeclining.

As the starting medians are all different it is hard to compare side by side, so for my own interest I pulled out the Brisbane & Sydney data to compare returns on $10K invested in 1970, see below:


What is interesting is that for most of the time (32 years out of 47 – 70%) The returns from that 10K investment in 1970 would have been superior had it been invested in Brisbane:


More dramatic, If we were to invest in Brisbane in 1988, the last time the % disparity between the two capitals was as large as it is today, Brisbane would have outperformed over the entire period, at times being as much as 50% ahead.


Similar story investing in 2002:


Now, obviously rebasing your investment to a different start year would give a very different outcome, where Sydney would be the better choice, but there are two high level things I take from this nearly 50 years worth of data:

1. Over the long term, smoothing the peaks and valleys, there is not a meaningful difference in performance between Sydney and Brisbane
2. Every time Sydney has grown solidly for several years and the % gap between medians has grown wide, it has reverted, due to Brisbane outperforming.

At the moment Sydney prices are nearly double those in Brisbane, as wide as this gap has ever been. I am going to keep by the faith on Brisbane, and think odds are better over the next decade that it will outperform.

 

I don't know honestly. I know the fundamentals in Brisbane are relatively weak compared to Sydney, but being able to buy a huge house in the inner city for the price of a 2 bedroom unit in Sydney feels too good to be true. Sydney's got the jobs, the company HQ's, the immigration, but still, all things considered, is it still worthy of such a large differential? I don't know but if I were to go purely on feels, something doesn't feel right.

When it comes to feels, I'm reminded of my spidey sense from like 10-13 years ago in Sydney. It was easy to get a contracting gig for $150k if you worked in IT. You could buy a really nice house for about 700k at the time. Something didn't feel right, and surely enough when Sydney boomed it made more sense. My brother is in Brisbane now on a nearly $200k p/a contracting gig and the numbers don't add up for me. Dem feels are tingling again.

 

Totally agree. A couple making $160k buying a $600-$800k PPOR is insanely easy to service. A lot of couples comfortably make $200k plus and at $800k for a decent home within 6km of CBD it’s very affordable and once fundamentals line up it “should” move

 

That's what I mean, it doesn't feel right does it? As you said, even a young couple on an average $80k salary is $160k in total. Put your nose to the grindstone and you literally have your house paid off in 5-8 years. What?! I know it's easy to be super analytical about this, but there's honestly something to be said about the feel.

 

100% I was saying that when myself and partner starting buying a couple years back and we’re about those salary’s which is considered average and honestly it was very comfortable.. fast forward a couple years and some time paying down loans and it’s all ready very easy to jump to the next bracket. We are average and certainly wouldn’t be the only ones experiencing this

 

Depends whereabouts in Brisbane and Sydney. I still think anywhere 10km around Sydney CBD will outperform anywhere else in Australia.

 

Sydney has major land constraints, which will keep house prices high. The new land releases are quite far from the city.
Brisbane can still keep growing outwards with not too much problem. But of course, inner Sydney and inner Brisbane will both continue be attractive to many, so if you can afford a house in these areas, they'll be solid.
For Sydney I can only think more and more high rise apartment buildings will be a norm, more building of duplexes where single family homes once stood, and new land releases intended for homes with minimal gardens on the outskirts of the city.

 

Interestingly, Westpac has just updated their forecasts again and Brisbane shows promise:

 

But all these Sydney advantages have been around for decades. And all this empty land in Brisbane has been around for decades, too. Why is it only now that this differential is allowed to be so large?

All these arguments make 100% sense. What doesn't make sense is why Brisbane would have ever boomed - ever - in that case. But it has.

I think the discussion here isn't about whether there needs to be a differential - there's no doubt Sydney will always be above Brisbane. The discussion is about whether this differential is way too big.

 

Spot on, that's the question. If I am ready to put my money into something today, where am I likely to see the best return over at least the medium term. At the moment the likely upside/margin of safety seems very compelling for Brisbane from the historical data.

 

Hold property in both Sydney and Brisbane- then it doesn’t really matter

 

Bit stale but an interesting chart nevertheless. Does getting lion share of the immigrants explain the large gap between Syd/Mel and other major cities?

 

Kind of a pointless chart without a legend...

 

It makes sense? Years on X axis, price to household income ratio on Y axis. The cities are the various lines

 

It's not clear which lines correspond to which city!

 

And it doesn't help that 3 of them are the same shade of blue.

 

It looks like Brisbane is the dotted line on the bottom, you will see how it has followed Melbourne and Sydney for the time up until the GFC. Perth is the other dotted line that peaked in 07. Post gfc, it's all bets off.

The graph referred to is familiar. Other graphs using data reflecting long term median prices in these cities follow similar patterns.

If we take the proposition that Sydney and Melbourne's additional increases since GFC have been migration-based, then without migration in the near term, demand in these two cities would hypothetically reduce. The gap between Brisbane and Sydney would fall.

I suspect that Westpac's prediction of significant price rises after 2022 would be for increases in price after potential losses in 2020 and 2021.

 

10 points Ms Angel



I have been thinking in the graph, there's just an additional 5th line (that is a mix of dashes and dots). Maybe it's Adelaide but not labelled.
Re: Colour choices, maybe they were going through historical changes city by city and in this dataset it was Melbourne's turn. Thus the yellow/orange and the rest dark blue just as a more generic comparision/to show context.

 

Apology for the confusing graph. This one might be better - between Perth and ACT, I think the dotted line is Perth.

 

I dont rely on charts because they are too broad and dont necessarily give an accurate account

Perth also boomed between 2013/2014, chart does not show this. Also does not show that Perth is now recovering, with multiple offers on properties in first week of listing

Also, Charts can not tell you what product is selling?? Everything is lumped in together