Is Brisbane the next property hotspot?

Is Brisbane the next property hotspot?

You have to go back to 2007 to use Brisbane, property and hotspot in the same sentence - but the Sunshine State capital is currently outperforming all the other mainland capitals.

Why? Well, there are a number of factors at play, but perhaps the most significant is the relative unaffordability of properties in Sydney and Melbourne. This is a push factor - but there are also pull factors at play, such as the subtropical climate, laid back lifestyle and lower entry point for properties. These factors, have helped to attract more people to Queensland, and Brisbane in particular.

Brisbane property market

Read more: 10 most affordable suburbs in Melbourne for property investment

Interstate migrants head to Queensland

Victoria has, up until 2017, been the state of choice for interstate migrants, and while it still has a faster population growth than Queensland, Tasmania and the Sunshine State now welcome the highest number of interstate migrants. So, although not all these people are moving to Brisbane or the Gold Coast, the increasing diversity of the job market has certainly helped attract more people to the area. In 2017 alone, some 130,000 new jobs were created; for a state that had previously relied on tourism for so long, this is a positive sign. 

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"So, although not all these people are moving to Brisbane or the Gold Coast, the increasing diversity of the job market has certainly helped attract more people to the area."

Despite this, the state is still very much a tale of two markets, with some areas faltering and others booming. The Mackay-Whitsunday area is a case in point, where dwelling values have dropped by 10.6% over the last year.

Let's take a look at those push factors a little closer and why Sydneysiders are packing up and heading north in droves.

In July 2018, the overall median property price in Sydney was $815,000, with houses at a median of $925,000 and units at $700,000. Contrast this with Brisbane, where the median property price was just $485,000, with houses at $525,000 and units at $382,500. For buyers coming from NSW or Victoria, those prices are very attractive - and more importantly equate to a cheaper mortgage.

Overall the median property price is up 1.0% rise year-on-year, while demand is also up 5.9% over the same timeframe. This is at odds with Sydney where property prices have dropped 7.4% over the past 12 months and demand has dropped some 22%.

Read more: Plot twist! Which areas are thriving in Australia's cooling market and how are they doing it?

Where to buy a property in Brisbane?

Brisbane houses for sale

If you are thinking of investing in the Brisbane property market, you'll want to buy in suburbs with strong growth potential.

According to CoreLogic, houses in the Brisbane suburbs of Carina, Chermside West, Geebung and Salisbury all had the shortest median days - less than 20 - on market in 2017. Days on market is a solid metric that indicates a ‘hot’ market where buyers are snapping up properties - often before they go to auction or for sale. All these suburbs also had a median value under $400,000 - which by NSW and Victorian standards, would be a bargain price to pay for a house.

The most consistent top performing suburb in Brisbane, by consistent median value growth over 12 months, 3 years, and five years, is Yeronga which grew by a median value of 40.9%.

Realestate.com.au ranks East Brisbane, Indooroopilly, Paddington, Holland Park, and Wilston as some of the most in demand suburbs for houses in Brisbane; while Graceville, Mansfield, Tarragindi, Camp Hill, and Red Hill are hotspots for buyers of apartments.

Brisbane house or apartment?

If you are weighing up between investing in a house or apartment in Brisbane, all the data points to houses being a better investment - at least in the medium term. Apartments reported a drop of -4.1% year-on-year and -1.7% quarter-on-quarter. This is in contrast to houses which are up 2.7% and 1.0% over the same timeframe.

The discrepancy is partially down due to the oversupply of new units in or around the CBD, though established apartments in suburbs further away from the city centre are reportedly still experiencing solid demand.

Read more: Top 10 places around Australia to invest in an apartment

Alternatives to buying property in Brisbane

Townsville property market

There are other alternatives to Brisbane with solid growth prospects. The Gold Coast is benefitting from the infrastructure commissioned for the 2018 Commonwealth Games and some 10,000 people moving to the area every year. This has driven the median price of property up 4.1% year-on-year, and 2.1% quarter-on-quarter. Rental vacancy rates are also currently low, at less than two per cent - which is a good indicator of strong demand from tenants.

"The Gold Coast is benefitting from the infrastructure commissioned for the 2018 Commonwealth Games and some 10,000 people moving to the area every year. This has driven the median price of property up 4.1% year-on-year, and 2.1% quarter-on-quarter."

Further north, Townsville should also have solid long term capital growth potential, as it is the recipient of significant investments in the form of a port upgrade.

As well as this, the Sunshine Coast is posting solid gains with dwelling values up 5.8% over the last year. Here, a shortage of housing, investment in infrastructure and interstate migration to the area are all contributing to perfect conditions for solid growth in the near future. All the data backs this up, with rental vacancy rates on the Sunshine Coast at 1%, with the suburb of Caloundra at just 0.5%.

So is Brissie about to boom? The short answer is probably not - it is no Hobart, where property values are up 11.55% year-on-year - but you should still see slow and steady growth over the remainder of the year, which is a lot more than many state capitals can say. How much exactly? Christophers Housing Boom and Bust Report predicts modest growth of +3 per cent to +7 per cent for 2018.

Read more: Best areas in Brisbane to buy property in 2018

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