Brisbane is the quiet achiever when it comes to property market. It is one of those cities that just keep humming along, quietly achieving its own goal, not discouraged too much about what happens in the southern property markets. Brisbane property market has been characterised by a relentless, steady upward trend as shown in the graph below. There were no booms and no busts. Brisbane property is a great example of “steady does it” case, where predictability of house prices is everything and stability is a bonus. Let us look at the property forecasts for Brisbane in 2019.
In percentage terms, Queensland is roaring! Queensland just third recorded the highest percentage population growth in Australia. Only Victoria and Canberra had higher population growth. And we all know that Canberra shouldn’t be counted! This means that Queensland is become a more attractive proposition. People moving into the state means they need somewhere to leave, the demand for property increases, which in turn means that property prices are likely to be supported.
Let us also remember that a large proportion of people moving into Brisbane are interstate migrants, escapees from Sydney mainly, but other states as well. Interstate migrants tend to be on the higher scale of income and net wealth. Its people who have jobs, well paid jobs often and who can afford to buy property right away or soon after they arrive. In general this means good news for Brisbane property, especially so property within the Brisbane city council.
There is also a larger proportion of New Zealanders moving to Queensland, with this demographic showing good characteristics of adjusting to Australian job market and economy. Meaning that they are able to secure jobs quickly and start looking for their own nest. This tends to mean increased demand for property as well.
Queensland economy remains sluggish. From perspective of all property related metrics we looked at economy is by far the most disappointing one. Queensland continues to have a stubbornly high unemployment rate, at 6.3 it is two percentage points higher than both Victoria and New South Wales. However, we have noticed that participation rate has been improving and at the time of writing of this article it was among the highest in the country. We are hoping that Queensland economy will start improving gradually.
Our thesis is further supported by the fact that there is a large pipeline of projects scheduled to start in Queensland. These are multibillion projects such as HS Wharf, Queens Wharf, Cross River Rail and TradeCoast. While we expect these projects to take of in 2020, it is likely that they will start impacting the economy in late 2019.
Vacancy rates continue to trend down, which means that oversupply of properties is being absorbed. Even the unit oversupply in the city did not play out as badly as some forecasters expected. We would like to highlight that units are not expected to perform in 2019.
From perspective of housing supply, we are noticing a tighter supply in Brisbane Council area. However the South Easter Queensland corner is edging very close to oversupply, especially the Logan City area. We would stay away from this, investor driven area, which could potentially spell trouble should oversupply crystallise.
We expect to see higher returns in Brisbane towards the end of 2019, especially as the internal migration increases and people move up north. Economy is readjusting from mining boom, and it is doing so better that Western Australia. Lower Australian dollar is expected to support further tourism revenues. We think Brisbane is an interesting market to watch, and while 2019 is a bit too early to call, we think it should be one of the best property markets in Australia in the medium term. Significant pipeline of projects and entertainment investment is likely to provide an upside to property markets in Brisbane specifically and to lesser degree in Queensland overall.