SE QLD - Australia's New Investment Hotspot
Recently we have been consumed by the royal commission findings and doom and gloom reports of property prices declining. Are there still opportunities for growth in Australian residential property? Find out from James Nihill.
We have all been consumed with the royal commission findings and doom and gloom reports of property prices declining. In deciphering the facts from the fake news –are there still opportunities for growth in Australian residential property and where are the best locations to invest your hard-earned dollars in?
Media reports show that Sydney and Melbourne property prices have been the hardest hit in the downturn – but that is only because these hotspots had experienced unprecedented growth over a period of years that was simply not sustainable.
Savvy investors have increasingly looked interstate and to regional locations for both lower entry prices and better growth prospects.
Right now all roads lead to South East Queensland. As Lara Bingle famously said in the TV advertisement “so where the bloody hell are you?”
SEQ property prices really are on the brink of a growth phase after almost a decade of stagnation. It never experienced the crazy growth that the southern states went through yet economic indicators are strong for sustainable, moderate growth moving forward.
In fact, figures from CoreLogic’s Hedonic Home Value Index show Brisbane was the only major capital city in Australia to actually record growth in house prices at the end of 2018. And in 2019, prices in inner-city Brisbane are forecast to rise by around 4%.
More affordable house prices also mean that the Queensland property market is generally less exposed to growing uncertainty around tightening lending criteria and any further changes that may come into play as a result of the royal commission.
Queensland’s buoyant rental market has been dubbed a “landlord’s market” and this is also great news for investors. Residential vacancies remain low and steadily declined throughout 2018 to around 2.8% in August 2018 according to SQM Research – down from 3.4% in August 2017.
Queensland’s forecast growth is underpinned by affordable pricing, strong interstate migration, solid population growth and infrastructure.
According to State Government projections, Queensland's growing population is expected to hit 6.7 million by 2036 and the State is committed to supporting this with high levels of government infrastructure spending. In 2016, South East Queensland’s population was 3.5 million and over the next 25 years it is expected to reach 5.3 million people. This growth requires building more than 30,000 new dwellings each year.
The real opportunity emerges as housing in some key areas remains undersupplied and will further tighten as the population continues to grow as forecast. Demand is set to be driven into key suburbs within the Logan and Ipswich Local Government Areas, with both regions potentially facing significant supply challenges when partnered with such strong population growth forecasts.
Ipswich is set to attract a strong share of population growth, registering a 144% increase in new residents between 2016 and 2036. Similarly, Logan’s population is set to grow by 56% while the Brisbane CBD is also forecast to receive a 21% boost to its residential population by 2036.
The forecast population growth in South East Queensland is supported by more than $25 billion in infrastructure spending.
South East Queensland presents some compelling investment opportunities. But as always, not all properties are created equal and investors must do their homework before jumping in.
Some new developments are completed to better quality standards than others and there are certain suburbs that will perform stronger than others.
Investors are cautioned to do their numbers, research specific locations and always seek professional advice before jumping in.
Investment mistakes are costly and can be made in haste. It can be very easy to jump into an investment mistake but very hard to get out of it unscathed at the other end.