Brisbane has sun, sand and singlets in winter. It’s the third most populous city in Australia. A fascinating mix of historic Queenslanders and sleek, glass and chrome apartment blocks. Brisbane is also a property market that, in uncertain times, shows no sign of slowing down. So what makes Brisbane so attractive to investors? Let’s examine a few factors.
The Brisbane property market shows no sign of slowing down.
1. High rental yields
Brisbane has gross rental yields that are, on average, above both Sydney and Melbourne’s. A report by CoreLogic found that Brisbane had the second best rental yields for apartments in Australia, only behind Hobart. This is despite the city reaching an oversupply of apartments like many other cities around the country. SQM research has found that three bedroom houses in Brisbane perform the best in terms of rental yield. Rental yields from houses in Brisbane have generally remained steady over the past year.
2. Strong capital growth
The latest data from SQM Research projects Brisbane property price growth of between 3% to 7%. There is strong investor confidence for property price growth over the next five years on the back of population growth and infrastructure spending. Based on the Property Investment Sentiment Survey results, Brisbane will be one of the best capital cities for capital growth over the next five years.
3. Affordable house prices
Brisbane is no longer a well-hidden investment secret. Its property prices are jumping up as we’ve highlighted before. Yet, house prices are still well below the average in the southern capitals. For example, in the suburb of Logan, the average house price is $313,000 with a rental yield of $330 per week. It’s easy to see why investors continue to flock to the Brisbane honeypot.
Brisbane is rapidly becoming a leisurely alternative to Sydney and Melbourne for its cheaper properties and laid back lifestyle. There’s a clear exodus of people moving interstate to Queensland. In fact, Brisbane had the highest net internal migration gain of all Greater Capital Cities in 2015-16 (10,100 people), ahead of Melbourne (8,300). Clearly, as people continue to flood into the state, the demand for property will grow.
According to the Queensland Government Statistician’s Office, Queensland is expected to increase its population to 6.8 million people by 2036. Its current population stands at around 4.9 million, which gives an idea of its booming trajectory.
5. Strong economy
Queensland has experienced consistent and solid growth over the last ten years, averaging about five per cent annually. According to the Queensland government’s mid-year review, Employment growth has strengthened significantly. Trend employment has risen 113,000 over the year to November 2017, with Queensland generating more jobs than any other State. Economic growth is also forecast at 3% in 2018-19 –broadly in line with national growth. There’s also been a dramatic investment in infrastructure spending in Brisbane.
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6. Infrastructure Investment
Queensland is home to increasing infrastructure investment from both overseas interests and the Queensland Government. Strong investment in infrastructure will see more job opportunities, economic activity and the corporate and leisure tourism markets benefit greatly. The Government has focused big on infrastructure projects under the 2017-18 budget, investing a total of $42.75 billion over the next four years on transport, roads, education and health facilities and the energy and water sectors.
A record investment of $21 billion through the Transport and Roads Investment Program will be committed over the next four years, generating 17,000 direct jobs.
Major projects which will be game-changers for Brisbane include:
$944 million Brisbane Metro from Eight Mile Plans and Herston to the CBD, which is forecast to complete in 2022
$5.4 billion Cross River Rail Project in South-East Queensland
$3 billion Queens Wharf in the Brisbane CBD which is forecast to create 8,000 jobs when completed
$1.3 billion second Brisbane airport runway
So, examining all these factors, it’s clear that Brisbane is a city of great potential and growing opportunity. It has been the target of investors for some time and will continue to be an excellent growth area. Yet, as with all cities, there is a cautionary reminder that it’s not a homogenous market. It’s made up of many different suburbs and areas, all of which have very different growth rates and rental yields. Therefore careful, data driven research is needed before leaping into the investment market.
Still, Brisbane is likely to be a bright investment hub for years to come and the call of the north will resonate strongly for investors everywhere.