API Blog :: Have your say!

Those who trade in the stockmarket will be familiar with market highs and lows. The Brisbane market has just demonstrated that it has a strong floor and even better, we’ve just found out where the bottom is by testing it as a result of the recent flood.

It’s often hard to find the true bottom of a property market. But I believe we’ve just found it and that Brisbane property values will perform well in 2012, 2013 and 2014.

The Brisbane floods in January caused damage and certainly held back Brisbane’s emergence as the next hot market. However this new world-class city won’t be held back for long.

Brisbane’s long-term future remains bright, mainly due to the volume of resource industry development in the state, which is allowing Brisbane to evolve as a huge service and office centre for companies such as Rio Tinto, who are buying up in the city’s office precinct.

Those who can reminisce about property booms may remember the huge spike in house prices that occurred in the Perth property boom starting in 2004. You’ll soon find similarities between Perth from back then and Brisbane now; Queensland’s resource rich underbelly has finally reached its capital city.

The encouraging news that’s emerging for the city’s property apartment market tells me that the Brisbane market has reached its weakest point.

The Australian Financial Review offered some valuable commentary in a recent article entitled ‘Tide turns for Brisbane Apartments’. According to property researcher Lachlan Walker, “The city’s market had come through a challenging start to 2011….there’s definitely more confidence in the market, employment is full and we know the population is growing and rents are improving.”

Lachlan Walker also recently reported that in past cycles, Brisbane property prices have trailed those of Sydney and Melbourne by about two years.

“Given that both Sydney and Melbourne have entered periods of robust growth during the past 12 months, recording a median price growth of 17 per cent and 11 per cent respectively, Brisbane is likely to follow suit in the short term,” he said.

I agree with Walker – Brisbane is a bargain compared to other capital cities in Australia. Brisbane’s inner city real estate is more affordable than Sydney, Melbourne, Darwin, Perth and Canberra. It’s peddled in the same price range as Adelaide and Hobart, yet Brisbane has way more going for it, population and economy wise.

There isn’t a severe undersupply of housing in Brisbane, however the floods did lead to approximately 70 per cent less housing starts in that area, with projects being postponed.

Prices are less expensive than other areas so most investors see the opportunity, but locals don’t because they currently have a poor sentiment. It’s like Queensland has been beaten up, so they’re timid at the moment. For outsiders, it’s easy to see!
High household incomes and low prices drive capital growth; people have more money in their pockets and with an infrastructure spend of $32 billion, multiple growth drivers are culminating to force housing prices up.

Brisbane is well-planned city, perhaps because of its governance. Brisbane has a new Lord Mayor, Graham Quirk, who spent the past eight years as former Lord Mayor Campbell Newman’s deputy. Newman has been an absolute visionary – he spent his time as mayor setting up for and delivering what will be a well-planned city for people to live and work; the roads and infrastructure as well as dining, shopping, cafe and lifestyle precincts are visually appealing, organised and effective.

Ten years ago Brisbane lacked the lustre and excitement of many capital cities, yet today it’s a hotspot of activity and success – and success breeds success. Brisbane won’t suffer the congestion of Sydney or the industrial aesthetic of Melbourne. Brisbane will soon rival Sydney and Melbourne as truly world class.

Recovery is no longer balanced and on a knife’s edge; the bottom has occurred and I believe the only direction for the Brisbane market is to rise in value. Prices won’t soar this year but smart investors are buying up in strategic, tightly-held areas such as South Brisbane, Kangaroo Point, Bowen Hills, Newstead, New Farm and Fortitude Valley; all have the added benefit of being precincts that are part of Queensland’s enormous infrastructure spend.

Sam Saggers is CEO of Positive Real Estate, a property investment and buyers agency, which annually negotiates $250 million-plus of property. His advice is sought after by thousands of investors including many on BRW’s Rich 200 list. Subscribe here for his alerts and market updates.