A year in review. Today we are analysing performance of Australian capital cities. We believe that solid economic performance of capital cities is a big driver for growth of property prices. If Australian capital cities manage to reposition themselves towards knowledge-based economies that should be able to generate sustained economic performance. And where economies perform well people flock. Attracting people results in further demand for housing which drives property prices.
Brisbane economy and Brisbane property prices
Brisbane continues to attract interstate migration. Compared to its southern cousins Brisbane continues to offer laid back lifestyle opportunity, much cheaper housing options and better weather. We expect Brisbane to continue to attract interstate migration, with an increasing share of late as Sydney and Melbourne property markets are perceived un-affordable.
However, Brisbane needs to offer more than climate and lifestyle. We continue to see Brisbane struggling to adjust to post mining economic era. With Brisbane economic growth being below average we could indicate last five years as Brisbane lost years. Let’s not forget that Sydney had similar history. In the decade between 2000 to 2010, Sydney economic performance has not been ideal and the city has been trailing other capitals.
There are a number of positives we are seeing Brisbane that we think would impact Brisbane property market in longer term. There is significant drive by state government to promote Brisbane as an attractive, yet modern city. A large number of advertisements taken out by state governments in both Melbourne and Sydney are doing an excellent job in changing perception of Brisbane. Perception of Brisbane is slowly changing from a place where “nothing happens” to a view of a city that is quickly modernising.
Further, we are positive on recent projects undertaken by Brisbane City Council, State Government and SEQ council of mayors’ city deal. There is a lot of activity happening in the background and if even some of that to eventuate we would become bullish on Brisbane. Significant spend is in the pipeline, like modernisation of Brisbane river precincts, especially Cross River rail, Queens Wharf, Brisbane Metro and many more.
State government is finally becoming more aggressive in lobbying the federal government for additional funding for projects that could completely reposition SEQ as an advanced knowledge-based economy. We are seeing QLD state government becoming significantly more vocal in their lobbying for the state and we love it.
We are already expecting positive impact in the medium term on Brisbane property prices from projects in the pipeline as mentioned above. We expect the upward pressure to become evident towards late 2019 and into 2020. We don’t expect significant movement in Brisbane property market in 2019 mainly due to headwinds from southern states.