Buy Brisbane property

The bulls are coming for Queensland property:

QUEENSLAND is on the cusp of a property boom that could lead prices to skyrocket by more than 20 per cent in some areas and last for years to come.

Fears of a real estate armageddon in the wake of the pandemic have been replaced with a surge in confidence in the Sunshine State’s housing market, driven by an exodus to lifestyle and affordability, infrastructure spending and cheap money.

From Cairns to Coolangatta, buyer demand is at an all-time high and suburb sale-price records have been smashed since COVID-19 took hold in March, while the state’s southern counterparts are languishing.

New data from CoreLogic, analysed by Finder, has found the number of house sales in Brisbane jumped 21 per cent in just one month in July, and rose in value by nearly 23 per cent to a staggering $1.4 billion — a bigger rise than in any other capital city.

Economists at Westpac who were forecasting price falls of 10 per cent at the start of the year are now predicting a 20 per cent rise in Brisbane property prices over the next two years — the highest of any capital city.

Propertyology head of research Simon Pressley is expecting boom conditions “not seen in this country since the turn of the century” by Christmas — but not in Melbourne or Sydney this time…

Ryder Property Research managing director and Hotspotting.com analyst Terry Ryder agrees, although he expects price growth to be more in the range of 10 to 12 per cent…

CoreLogic head of research for Australia Eliza Owen said Brisbane and other parts of southeast Queensland would likely see a boost to housing demand once interstate border closures eased.

“This is because Queensland has been the highest recipient of interstate migration over the past few years, and the normalisation of remote work through COVID-19 may only boost that demand further,” Ms Owen said…

Alex Jordan of McGrath Estate Agents said Brisbane’s housing market was the strongest he had seen it in his 21-year career in real estate, and he would not be surprised if prices rise more than 10 per cent.

I agree wholeheartedly that Brisbane’s property (including nearby regions) is headed into a bull market.

According to CoreLogic, Brisbane dwelling values (including the Gold Coast) increased by only 13% in the decade to September 2020, well below the increases experienced in Sydney (+60%), Melbourne (+38%) and the 5-City aggregate (+35%).

As such, Brisbane’s relative valuation against the other Australian capitals is running near the lowest level in almost 50 years:

Brisbane’s gross rental yields are juicy compared to Sydney and Melbourne:

And Brisbane’s rental market has tightened significantly as Sydney’s and Melbourne’s vacancy rates have ballooned:

Brisbane is not nearly as reliant as its bigger city rivals on net overseas migration (NOM). Therefore, it won’t be nearly as negatively impacted by the collapse in NOM.

In fact, the federal budget projects solid population growth in QLD over coming years driven by interstate migration:

Finally, housing finance has strengthened significantly across QLD, which given past correlations signals rising dwelling values:

In short, now looks like a good time to buy Brisbane property.

I gave a similar assessment about Perth property last month.

Unconventional Economist
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Comments

  1. I wonder if lack of international travel will be net positive or negative for Queensland tourism. Obviously not being helped by QLD border closure at the moment.

    • Lols – yeah this is definitely happening….chortle.
      Look at the claims Leith is presenting – house prices had record rises and record sales in “JULY” – lets be clear – there were almost ZERO sales the month prior – so ten sales is a record in every metric.

      Brisbane and Sunshine coast have about 40% more properties than 2014/2015 – thats off the charts BAD – but yeah lets sell into a collapsing market and, um…..live the dream???

      QLD is entirely dependent on foreign tourism – Australians will be travelling all over the shop – but Sydney and QLD are all foreign.

      Heres a stat – The Great Ocean Road in Melbourne (my partner works on this) has BY FAR the most tourists of any attraction in the country – MULTIPLES of The Great Barrier Reef – but they spend no money and are internal – Aussies road trip – see the country. They will NOT be sitting in a bad cafe in Cairns.

      SQM :

      Asking sale price in Cairns is same as it was 5 thats FIVE years ago with 30% more stock.

      Townsville totally unchanged.

      Mackay is 20% BELOW its asking price of 2014

      Same with Rockhampton, Gladstone and everywhere else.

      So, um – tourism collapsing, prices have collapsed – NO WHERE is showing increases – while the effect of forced sales, JobKeeper, and insolvency holidays have not even started.

      Good one Leith – funny stuff – straight from Australias “#1 thought leading” investors – almost like their entire livelihoods depend on this spruik.

      Data says “NOOOO!”

      • He didn’t say QLD, he said Brisbane. Here in North of Brisbane it has had been stagnant for quite a while, but houses are selling very fast at prices about 10% to 20% higher than last year. I also know of several interstate buyers (Sydney, Canberra and Melbourne).

        • From Cairns to Coolangatta, buyer demand is at an all-time high

          On top of this Brisbane has seen stock on the market compound to now be 25% more than it was only a few months ago – fundamentally limited amount are selling despite anecdotal offerings.

          So what is actually happening ?

          Prices collapsed by almost 40% – and most sane people simply refuse to enter the market- the sellers who are refusing to lower their prices are seeing stock pile up – there are indeed some who need to purchase and are meeting the market (there are always idiots) – these are VERY small numbers.

          Sheer unadulterated lunacy in the face of undeniable, unquestionable economic Armageddon coming down the pipeline by a very few buyers who are meeting the market that is ballooning beyond comprehension.

          Crazy lack of basic thinking and zero analysis here.

      • Anecdotally, property sales are strong here in Brisbane – houses are selling very steadily, particularly at the low end which describes where a lot of the migration is coming from. There are plenty of $3,000 cars with NSW and VIC plates, and a handful of wealthy. The problem is stock – there’s not a lot of it and so whatever comes on the market sells.

        There’s also been an influx of foreigners (mainly sub-continent) — if not recently from overseas, maybe from down south?

        The traffic is out of control – even between rush hours.

        Hoping high unemployment will drive many of these people away – there are not many jobs around, even if this influx will create a few because of the added demand for things.

        I don’t know what info you have about the coasts but they look to be out of control with inward migration.

        • Your point about the migration patterns favouring the opposite ends of the wealth spectrum is spot on. Those who have zero commitments are the only ones capable of a move – either you’ve got nothing and can just as easily pick up the dole cheque in QLD or you’re wealthy enough that you can move without concern about jobs, mortgages and money in general. The middle 90% is going to be way too committed to make it fly and the WFH plan comes with enormous risks.

          Hearing of quite a few recent migrant arrivals making the move to fill gaps in the hospitality industry, so that could explain the sub-continent observation. Bugger if I know where they’re going as I hear the Sheraton Mirage has been operating at 10% of usual capacity since the outbreak, so there must be masses of workers available. All happily on JK and not willing to work perhaps? Ask Mr Kennard about that.

          • Once all the stimulus disappears i.e. the smog begins to clear, we should have a better grasp of the true economic picture. I just don’t know where this influx are going to get jobs. Hopefully it doesn’t eventuate in a crime-wave.

          • QLD borders are shut and Victorians can’t go anyhwere – its fundamentally b*llsh1t of the highest order.

          • I was asked yesterday: What is the difference between an Australian WFH employee and an Indian WFH employee?

            A: Cost

            WFH will drive more off-shoring and casualisation.

            Some employees are productive and trust worthy. Most are not. Most employees work out their fixed pay incentive structure – do as little as possible for the fixed $.

            I think WFH will not be as big a deal as people make out as employees under threat of lower pay (or none at all) will capitulate and return to offices. Plus sociopathic managers need to be sociopaths. Very hard to do that via Zoom.

            To me it seems a better time to buy in inner Melbourne than greater Brisbane. Against the herd.

          • I was asked yesterday: What is the difference between an Australian WFH employee and an Indian WFH employee?

            A: Cost

            In the cases where this is true, the jobs were already offshore a decade or more ago.

        • Victorians haven’t been able to move for almost 3 months – and the ACTUAL data says you are full of it. Stock is ballooning.

          • I didn’t mention Victorians — I was merely giving a bird’s eye view of what I’m seeing in my neck of Brisbane.

            A huge increase in VIC and NSW vehicle number-plates isn’t something I’m imagining. It’s real and there’s a stampede going on. Been happening for 2yrs.

    • Funny you should mention it Burb, but it may be a blessing for us here in SE QLD — the more expensive it becomes the less people will be able to afford to live here. The cure for low prices is, low prices and vice versa.

      • LOL. I can see the affordability strains already and the QLD politicians telling people to learn to code……maybe not, it has to be something construction related – ‘learn to caulk’.

        • I figured the best way to become recession-proof in a Labor run State was to get a job in Gubmint, but I’m assured that a white male has next to zero chance these days — unless previously employed in gubmint. So, ‘learn to caulk’ it is then 😉

          • They are currently slashing contractor roles in government in anticipation of a drop in State revenues in NSW. The VIc’s have already posted a massive drop in state revenues. If State revenues continue to drop they will have to look at further and deeper cuts.

  2. Quality of life 😉 that choice is for a very select few, for the rest it’s a northern version of Penrif Tarniet

    • Exactly. Until recently I called Manly … ‘Penrith by the Sea’. I have a mate who lives there. Although it has probably cleaned up in the last 2 years – still wouldn’t get me out on the Corso on a Fri or Sat night. I’m not looking to get my head knocked sideways!

  3. Forrest GumpMEMBER

    You can have the sub tropics & even the tropics. Scientists warn of wild storms, droughts and massive bushfires for these areas

    • You beat me to it. The footprint for cyclones is moving south and the strip between Noosa, Brisbane and Coolangatta will be one cat 4 or 5 away from disaster. Especially on the flood plain now known as the Gold Coast. Only real estate on higher ground ( and out of the dam over topping paths) should be considered if one is punting on Queensland.

    • Spot on. Climate change is going to stuff the place. West Coast Tas is genuinely one of the few places in Australia which will have reliable rainfall beyond 20 years.

      Plus, Brisbane only works if you can find employment or are planning on retiring up there.

      • Totes BeWokeMEMBER

        Nothing is reliable with CC. Ocean currents are changing, meaning all weather patterns will change. Western Tasmania could end up a desert.

      • So do all these figures include apartment/units? Brisbane has been building these things to the moon and those in the inner city (which usually were bustling with overseas students) now seem to be fairly quiet.

        • I’ve never read such Anecdata tripe in all my life as this spurious post.

          One minute on SQM dispels absolutely everything written on this page from top to bottom – from the

          “You should see all the Victorian number plates” – when Victorians have been in lockdown for most of the year and QLD has its borders slammed shut – yeah, ok champ. Through to to the “sales are pumping” – except we can see stock piling up in Brisbane and everywhere else, while “regionally” prices have collapsed.

          Complete rubbish from the spruiker himself.

          This is a paid advertorial from Propoetyology and they should admit as such.

    • Scientists warned of an increased likelihood of average conditions, and said that no further funding would be necessary.

    • I sure hope so – should help thin out the populations of undesirables 😉

      Once they discover how cheap Melbourne’s become again, they’ll all pack up and feck off

      • Correct. Nobody GAF about this stuff, let’s face it.

        They care more about problems that are tangible and here today. Being afraid of a future that may not even eventuate is of no concern.

    • Forrest GumpMEMBER

      QLD Home owners will be sunk with huge insurance costs. The other side of the coin will be NO INSURANCE for floods, storms or bushfires….its coming….

      Buyers seeking a loan in areas that are high impact climate zones will not get funding unless they first get insurance…. I’ll leave the rest to you guys to debate…but you get the point…right?

      • I'll have anotherMEMBER

        Good mate owns a Nth Qld brokerage. Says that sort of thinking is total bullsh*t.

        They make plenty of money off home insurance and are unlikely to stop offering any time soon.

        Also, rung 4 brokers, got 4 quotes, so whatever you’re dreaming up, it hasn’t arrived yet.

        Finally, if it ever got too expensive, gov would subsidise, they need people up here to run all the mines to pay for the Sth East corners public servants and infrastructure. No insurance and people would simply leave.

        • Forrest GumpMEMBER

          Its already here. Insurance companies are already aware of the risk of floods, fires and cyclones and the added intensity and frequency. Of course Insurance companies will offer insurance .That will never end. But the coverage & cost will and is already changing to mitigate risk.

          Your mate is just a salesman. Ask him if you can insure against storm damage along the beachfront and whats the cost?

          • I'll have anotherMEMBER

            No, he owns a brokerage consultancy. Yes it gets its insurance from elsewhere, but so does NRMa for that matter.

            I own a small beach shack besides my main residence, repaid premium last month, $1300 P/A inc. of contents. Coverage for all works of God not limited to storm surge.

          • I can vouch for cost of insurance going up, mine went up 50%! in ONE year!

            I decided to save 100% instead and take my chances.

    • I'll have anotherMEMBER

      Pretty rare to have a bushfire in the tropics mate. It happens, but at a much reduced rate to dry timber forest in dry air you have in the south, as opposed to jungle / rainforest in 100% humidity in the north.

      Bushfires are a problem for south of the tropic of capricorn, not so much the north.

      Cyclones are a problem, but that is what insurance is for. And you have to live north of say, Mackay to see one of them, and to see one more than once a decade or so, Townsville is as far south as you can go.

      As a former Sydney sider, can confirm in my experience Sydney gets more wild storms than Nth Qld, they just happen to be a lot worse up here when they do come.

      • The90kwbeastMEMBER

        Yes, one of his many doomsday bearish calls, which have all been super dooper wrong. And the ones he got right were due to COVID which happened after the call was made.

        A broken clock is right twice a day after all.

  4. Question is Leith, whether history of the late 80s is repeating?

    Between 1988 and 1998 Brisbane’s property values doubled and Melbourne’s were flat. If it did, by 2030 Brisbane’s median will be $1m and Melbourne around $700K. The political disasters that drove Melbournians northbound in the 80s/90s (Labor debt, followed by Kennett the slasher) are back with Andrews.

  5. The90kwbeastMEMBER

    There are several missing pieces from this analysis.

    One is the residential construction pipeline in Brisbane for a view of supply the next few years. Despite the recent apartment boom of the past 5 years up there finally increasing density, Brisbane still has a lot of sprawl, a lot of detached housing and I would think can quite easily become a modestly more dense city without impacting living standards too badly. New supply can address this, unlike in Mel and Syd which are much more built up cities.

    Second is unemployment rates. Is there a datapoint on that, because I’m sure the private sector in Brisbane is struggling just as much as everywhere else. Flight Centre alone has made thousands redundant (extreme example I know, but still), this metric matters. I can’t see interstate arrivals boosting prices if there is no employment market to move to. And retirees don’t move to Brisbane, they move to the GC or SC.

    On what is included, the reason why Brisbane is so much cheaper than Syd/Mel has been addressed in this blog probably hundreds of times – they were the prime recipients of OS migration. So all that will happen is Syd/Mel will have a correction (15% perhaps) due to the borders being shut, and Brisbane will slowly tick up to close the gap.

    Brisbane won’t crater like Melbourne is, or flatline like Sydney is doing, but a boom? I can’t see it just yet. I think it’ll be more of the same, ticking along each year at 2-3%p.a. growth like it has done so before.

    • Yep. To get that correlation back doesn’t mean Brisbane has to boom. Just that it doesn’t fall as much as Syd / Mel.

      It’s kind of like landlords saying ending negative gearing will push rents up?

    • 4 this is a paid ad in my view for propertyology.
      5 just look up stock on the market for Brisbane – going through the roof.

      Check out prices in the regions – flat or falling.

      This is flat out spruik and people should be ashamed.

      • The90kwbeastMEMBER

        Unsure on the sponsorship conspiracy but I agree calling this a bull market is a brave call.

        To quote Reusa, more like a positive sideways market!

      • Any data points on stock on market? From my understanding stock has picked up from a very low base but it is still a long way below similar times last year and year before (ie peak selling period). Happy to be proven wrong with data points.
        Cheers,

        • In addition to the amount of listings without prices, I’ve been informed agents have two sets of listings available – one set is made public on the websites, the second set is only via discussion.

  6. Surely these comments relate to houses only, at least in Brisbane and not apartments? After all, isn’t there a glut of apartments in Brisbane?

  7. Chickens always fly the coup when they fear a fox. Keeper SCOTT might conceder clipping their wings.

  8. What was happening in Brisvegas pre COVID?

    Lots of nice free standing homes selling at a premium, yes. Moreso if above flood plain.

    But Units? Valuers were being threatened by developers with legal action if the value didn’t suit. In some cases the valuers tried to value 40% below what the developer wanted!!!! Remember?

    https://www.afr.com/politics/developers-attempting-to-intimidate-valuers-into-inflating-apartment-prices-20181109-h17pm6

    Don’t know if said valuers are still:
    – working in the industry
    – alive anymore

    Point is, it was not a pretty sight pre COVID in the apartment sector.

    All comes down A x B x C where

    A = number of borrowers
    B = stupidity/ignorance
    C = credit availability

    Scummo/ RBA are fixing C (and holding the AUD above 70c – which is staggering, frankly), MSM/DomainFax are going into overdrive to fix B, COVID has torpedoed A but the second it is reasonable to do so,Scummo will open floodgates

  9. Some weird sh*t is going down alright. 2 yarns …….
    1. Sunny coast, partners daughter trying to get rental 2br unit for 2 mths, very short supply, lots people at inspections, rentals gone 2 hrs after listing. Agents telling them usually 200 rentals move a week, has been up to 800. Pervy old agent felt sorry for the pretty young girls and got them a gig ….. at 470/wk !!! for a new average unit. They took it. See the ABC story yesterday about low vacancy rate 0.5%, believe it. I’m buggered if I know where all the work is !!

    2. Oldies just sold in Cairns. 3 acres past Kuranda. I’ve been watching their area for 12 mth knowing they had to move. Places on the market 12 months, average prices. They sold in 5 weeks, got 40k+ over what I thought … happy days.

    two tourist haunts that should be stuffed !! Cairns, first to bust last to boom …. bugger of a place.
    but there you go, its upside down miss jane !!