2014 McGrath Report - Brisbane Predictions

September 23, 2014
Caroline Jean-Baptiste

Following our last blog regarding the recent release of the annual McGrath Report, John McGrath takes a more in depth look at what’s happening in what he believes will be the next Australian capital city market to boom – Brisbane.


"All eyes have been on Sydney and Melbourne in recent years but history tells us that when the southern capitals boom, Brisbane and South-East Queensland inevitably follow as southerners migrate north looking for better value for money and the attractive lifestyle benefits of the Sunshine State.  

 

Upgraders are driving most markets in Queensland but there is increasing interest from Melbourne and Sydney investors chasing better yields and value too. Over the next three years, I believe Brisbane and South-East Queensland will deliver the best capital growth of all the major cities and presents a fantastic opportunity for southern investors, downsizers and seachanging families.



 

Rewind five years and the median house price in Brisbane wasn’t that different to Sydney and Melbourne. RP Data shows the price gap was just $25,000 with Melbourne and $134,000 with Sydney. Today, that gap has widened significantly to $115,000 and $270,000 and it’s this sort of gap that has sparked Brisbane’s previous growth cycles. That’s what we’re starting to see now. 

At the start of any growth period in any location, you see a few tell-tale signs:

 

  • More local and out-of area investors
  • More families upgrading while value remains
  • First home buyers looking to get out of the rental cycle
  • Returning developers
  • The number of sales goes up
  • The days on market goes down
  • More buyers attend opens and register to bid at auctions.

 

All of this is happening in Brisbane right now and it’s finally starting to have an impact. 

RP Data reports Brisbane property values are up almost 7 per cent in the 12 months to August 1 (which looks slow compared to Sydney’s 14.8 per cent and Melbourne’s 11 per cent) but as growth in Sydney and Melbourne slows down, Brisbane’s is likely to ramp up.



 

Last year, Brisbane’s sub-$1M bracket was the standout sector, this year it has extended to sub-$1.5M.  The $500,000 to $700,000 bracket is very strong, with lots of families selling to upgrade to $1M+ properties and lots of buyers ready to compete for their homes.



 

The inner ring markets 5-6km from the CBD are in strong demand, followed by the middle ring about 10km out. We are starting to see that classic ripple effect as more people expand their search to the middle ring where they can get bigger blocks at slightly better prices yet still with easy CBD access.

This spring, Sydney and Melbourne will no doubt dominate news headlines but Brisbane is most definitely the market to watch over the next three years. The time to buy is now. 



 

Here are my top suburb picks for Brisbane 



  • Indooroopilly – offers a great mix of property types including new apartments and prestige homes. The new $450M refurbishment of Indooroopilly Shopping Centre has created a major suburban retail mecca and a real alternative to the CBD for major shopping excursions.


  • Carindale – just 10km from the CBD, Carindale is benefiting as people widen their search from the inner ring. It offers bigger blocks and homes for fractionally less and good shops including a Westfield.


  • Hendra – popular suburb with easy access to the airport. A value alternative to the renowned blue-chip areas of Hamilton and Ascot."
 
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