Australia’s property investors are increasingly looking to the Queensland capital for investments.
The majority believe that Brisbane is the next property hotspot, judging by PIPA’s 2016 Investor Sentiment Survey.
A majority of property investors have been priced out of Australia’s two major capital cities. Brisbane is providing an alternative. When compared to Melbourne and Sydney, Brisbane has better rental yields and more affordable property prices.
That and the hunger to catch the next growth market while in its initial stages have driven a positive sentiment towards the Sunshine State’s capital.
The question lingering over our heads is: Are they right? Is investing in Brisbane’s property market ideal as everybody seems to think?
If so, how do you get in on the action?
We have explored these questions and many more by tapping into what Australia’s property market experts think.
So, before you dive into the frenzy that is property investment in Brisbane, read this.
What makes Brisbane an attractive location?
Affordability
From Ben Kingsley, Chair of Property Investment Professionals of Australia (PIPA):
“Brisbane property values have become, comparatively, very affordable, with the median Brisbane house value now approximately $530,000 lower than Sydney’s and $230,000 lower than Melbourne’s.”
That’s a staggering difference in prices. What’s more, the purchasing power of a property within 20km of Brisbane’s CBD compared to Sydney’s is quite stark. A brick cottage in Ellen Grove, Brisbane will cost you just slightly over $230,000, while a similar one in Regents Park, Sydney, will set you back $859,000.
Affordability is crucial in any investment, even more so when it comes to real estate. Brisbane’s low entry point gives property investors an opportunity to commence their investment journeys, or grow their portfolios.
Rental yield
Yield is another key yardstick property investors usually watch closely. As of now, Brisbane property is enjoying strong rental yields. And it’s likely to continue doing so for a foreseeable future.
According to SQM Research, “Brisbane continues to have the highest gross rental yield for units (5.3%), and remains in the top three Australian capital cities for gross yield for houses (4.2%).”
Markets that exhibit consistent price growth and high rental yields will continuously attract local, interstate and foreign property investors. I believe that if Brisbane’s property prices remain affordable, the strong demand will prevail.
Where can you buy in Brisbane?
How to Invest in Property 101 says “the type of property you buy is just as important as where you buy it.”
It doesn’t get more important than that. Even in Brisbane, you have to be selective in terms of the location.
According to Terry Ryder, Property investment expert and director of hospotting.com.au, the momentum of Brisbane’s property market is “on the southern side,” and the inner city in our opinion.
Logan and Ipswich offer low median prices and good value for investors. In the surging inner-city, Kangaroo Point, Brisbane City, Highgate Hill, Coorparoo, New Farm, Spring Hill, Teneriffe, Paddington, and Bardon, prices are predicted to grow steadily. You can include the north side suburbs such as Fitzgibbon, Brighton, Bald Hills, and Hendra
According to Andrew Wilson, Chief Economist at Domain Group, Banyo in the north is set to perform as well because of its differentiating factors.
“A lot of people are moving to Banyo due to its new development, affordability and location close to the airport and new facilities being built.”
What’s the best investment property to buy in Brisbane?
As an investor going into a new market, it makes sense to know the types of property that are on demand, as well as those that may be out of demand. To do this you will need to do a lot of your own research.
“Buying a high-quality investment property in Brisbane doesn’t require genius, but it does require the time to research the market and assess individual properties to make an informed decision” says Andrew Wegener, Principal adviser and buyer’s agent at Aquila Property Investment.
He also advocates for proper consideration of fundamental factors to avoid falling for the same mistakes like many property investors.
Mistakes, such as purchasing the wrong property type in the wrong areas.
“Many investors will not understand what property types are best for Brisbane’s current and future housing needs. As a result, they will purchase a property that is poorly positioned to attract future asset price and rental growth.”
“Not all parts of Brisbane will deliver equal results. There are many suburbs in Brisbane that will suffer from oversupply of property relative to demand, which will prevent price growth and often force investors to sell at a price below what they paid for.”
What makes a good investment is not just a favourable price point. Factors such as location, property type, design, and strong indicators of capital growth are the basis and should be followed for property investment in Brisbane.
Brisbane’s property market is ripe indeed. The capital’s economy is one of the highest-performing in the country. Its population is growing and infrastructure is being added while property prices remain affordable. I would say that now is the right time to get in.
To find out about where our in-house research believes are the top 9 suburbs for unit growth in 2016 and beyond, click the image below to download your free report.
