Why Hasn't Brisbane BOOMED

Not expecting a crash, never once said that, but environment in general is not favourable for property investors. Australia wide. Also, not saying that investors can not make money, but it sure as hell wont be the buy and hold strategy... as at a minimum would need to keep up with inflation, other wise in real terms investors are going backwards.

When investor loans revert from IO to I&P you need to tack 40% onto the loans, this is just one nail in the coffin thanks to APRA

How it all pans out no idea? But IMHO it will be like pushing **** up hill in terms of growth in the short term, until we see credit easing..... Of course I could be wrong. But we are now seeing market sentiment changing across Oz, this is huge.

All markets will be impacted by these changes regardless..... but as I said lets review in 6 months time

 

For sure. However I think there is still plenty of $ to be made in bris but slow and steady and no.boom ☺Targetting areas reasonably close to cbd, transport, good schools and in demand facilities that are dominated by upgrading families is a safe bet particularly with higher than average income. Those are the areas most unaffected by serviceability as they are borrowing a smaller amnt unlike fho and investors.

 

On its own it's not enough to drive a boom but it certainly helps that Brisbane is much more serviceable

 

Even if credit eased would people be game to borrow game to borrow more? perhaps some investors would, but I don't know about a lot of owner-occupiers? prices are pretty high relative to incomes

 

The finance condition are certainly bad now days, but hows it compared to say in the 80s when interest was in the teens. 90s where interest was around 8 or 9%. property still boomed under those conditions when people really straggled to keep up with repayment. From stats and data, properties in Brisbane, Perth and Adelaide is now more affordable in a very long time(maybe 12 yrs+) if we take inflation, wage growth and interest rate in to consideration. IMHO those markets will boom if the demand is high even in the current credit condition, while its tight, but by no mean the worst. Anyone with property investment experience stretching the last 30 years to share your experience?

 

We bought our first IP in 1992, so not quite 30 years’ experience. We bought our first PPOR in 1979, so nearly 40 years ago.

We started out as B+H investors and still are (we have bought a lot more property than we have sold).

When one has a 80 year time horizon (most of our IPs are owned by trusts), one does pay too much attention to media reports, boom and bust cyclces, interest rates (bought property when rates were 17% and 4%), vacancy rates, inflation, who is in Government, ...

We bought property when it made sense to us . To us, that is all that matters.

We are now in our early 60’s and retired since turning 55. TBH, we can remember what was going on in the world when we bought each of our IPs. We know the value of our portfolio today, we know the gains, we know its cashflow situation, ...

We still have significant debt (always have) but we sleep very well at night.

In summary, no regrets (not like a lot of people we know) .

DEFINITELY NOT ADVICE

 

all in all, if you had $700k to spend, would you buy and IP (lets say house, 3x2) on the south side or north side of Brisbane? (with intentions to hold for the next decade). ?

Seeking wisdom.

 

But you need more than one driver.....

 

North.. More resilient. Faster gentrifying. Better demographic

 

I have actually seen conflicting data on this because I've seen reports that Brisbane has a relatively high rate of Mortgage stress. Bne is a poorer city than Sydney Melbourne Always has been.

 

Maybe Sydney, but not Melbourne in terms of price. There were times in the past where price of Brisbane was on par or surpass Melbourne. As for mortgage stress, maybe employment is still not at the level it needs to be for a boom yet.

 

Put in to perspective, we had the lowest interest rate in lifetime, if not the lowest in history. The cheap and abundant credit was once off for us. Sydney and Melbourne happened to boom but not purely because of it. What about all the other booms when credit was hard to obtain and expensive to service.
We must have a longterm perspective to be a successful longterm investor and cheap credit in the past few years are just a very unusual occasion.

 

Quote..
Anyone with property investment experience stretching the last 30 years to share your experience?

Just looking back in the mirror-first property was purchased about this time of year give or take a few days in 1983..
Bought a large hill-side block at cedar creek -no fence - no entry roads bare and covered in lantana with a few burnt out car bodies at the front of the block..The Bank would not lend me money but advised me to go with a company called Custom Credit at 22% ,sold that in 1998 -I trusted people back then not now..
Then went into a small Brisbane valley town and bought over 10 houses removals into vacant blocks -the land was less the 10k -the houses were cut in half and reset on the sites -and everyone was sold before the paint was dry..
Came back to Brisbane early 1990, bought 2 inner city houses walking distance from the CBD ,not long after that after seeing a add in the tenders and quotes made a big mistake and did a deal with a Gold Coast based Japanese business man and exchanged the free-hold titles for a free-hold hotel in nth qld..

Held that hotel for six months ,then leased it out -then sold the free-hold meet my Wife on a plane and started again in inner Brisbane ..Bought and sold several up too now..

One reads all the time in this site about the busts that never come,because most investors are not that good at understanding the unknowable about things they will never come to know..

But all in all ,CBA IN 1994 compounding wise was the best so far ,just spread your money ,and this time of morning Mister Market is waiting..

 

You also had high inflation eroding your debt along with high wage growth,

Yes cheap credit may not be the only driver, but these 3 together may just do it

Anyhow, im happy with slow and steady as she goes, under the radar, ripe for the picking for the ones that apply risk management strategies, buffers, pays down debt, buys with adding value In mind - will still win in the coming decades.

By all means, if the next big "driver" comes along in the next 20yrs that causes the next rise, I wont be complaining but that's a bonus.

 

Population growth? Interstate migration is trending upwards.

 

I meant poorer in terms of less general wealth. People used to visit from down south and be surprised many roads in the inner city were not sealed.

 

Brisbane drivers (not in order):
-Migration
-Arbitrage (its not at the long run relative price - I have posted graphs of this)
-Quite a bit of big infrastructure construction coming. Queens Wharf. Metro. CRR. Roads. Runway.
-Increasing diversification and coming of age as a city with finance and IT etc increasing. Bne is fast losing its country town feel that it held for a very long time.
-Mining will be the big influence - that's on the upswing.

 

inflation is on the way up around the world with huge amount of liquidity pumping into the economy in the last 10 years. Western governments are actively trying to encourage inflation and wage growth. price of material and labour will shoot up as a result. Its likely be the next big driver more than loosing of credits and low interest rates.

 

I feel like one thing we find hard to Quantify is confidence, when you speak of Arbitrage, i find in a lot of peoples minds around Brisbane they feel there is good value around, middle ring especially, and this gives confidence to go out and buy the right stock and pay slightly more for the right house in the right location. Hence helping the slow and steady growth despite the current financial environment

 

@MTR ..... why does it need too boom....whats wrong with a healthy yoy increase ?

I hate booms myself.....a moderate increase with some years of extra growth is fine by me, no huge increases followed by not much....