December 20, 2016
It’s been a big year for property, but most of the news was dominated by what’s happening with the supply of apartments. While this is a big issue, Brisbane’s overall outlook is good when compared with the rest of the country.
As one of Australia’s most affordable capital cities with consistent growth forecast for house prices, the Brisbane property market provides buyers with a number of opportunities to invest or find a home. In 2016 we saw a modest growth in housing prices and this is expected to continue in the coming years. By comparison, most other Australian capital cities are expected to see a steady decline in both house and unit prices over the next few years.
Here’s a recap of what happened this year and what we can expect in 2017.
A two-speed market developed
The interesting thing happening in Brisbane at the moment is that there is an undersupply of houses and an impending oversupply of apartments. This means that while inner-city apartment prices will continue to fall over the next 18 months, houses will go in the opposite direction.
Brisbane’s median house price is currently $525,700. By 2019, QBE forecasts this will grow by 6.5% come 2019. By comparison, Sydney’s median house price will only grow by 0.2%. In the same period, Melbourne is expected to fall by 0.6%.
This means that those wishing to purchase a home can expect to see returns on their investment. For buyers interested in an apartment, you may be able to find a bargain in the coming years, though it will be in your best interest to hang onto it for a few years until we start to see prices start to grow again. Approvals for apartments are starting to ease off and it is expected that apartment demand will catch up with supply by mid-2018.
Demand for houses will continue
There are plenty of apartments up for grabs in Brisbane right now, but buyers want houses. This increasing demand saw house prices in the inner city increase by 7.8% in the 2015/16 financial year. In the middle ring, this growth was more modest at 2.2%.
For those wishing to invest in a house in Brisbane, these figures show the potential in the middle ring, where more realistic prices will mean better rental yields on your investment.
Buyers looking for a home will also find better value in this ring, matched with Brisbane’s growth forecast for house prices.
Interstate property investment set to increase
Interestingly, Sydney’s average wage is only 17% higher than Brisbane, yet the difference in property prices is far greater than this. Given that Brisbane is a much more affordable option and Sydney and Melbourne have plateaued, it is predicted we will continue to see increased interest in our property market from interstate investors.
Attractive rental yields outside of the city
Inner-city apartments have typically provided investors with good rental yields, but that’s changing. Right now, it’s many of the outer suburbs that are attracting the best returns.
Affordable property prices combined with rising employment figures in areas such as Logan and Ipswich are attracting more tenants to these areas. For investors, that means better returns as well as increased tenant demand. To see which suburbs have the best rental yields, use the investment tool on realestate.com.au.
The future of interest rates remains uncertain
Just what will happen with interest rates next year remains unclear. If the economy continues to be sluggish – and this is affected by a number of factors – the Reserve Bank of Australia may need to drop the cash rate from the current historic low of 1.50%. In the short term, however, rates will remain low, providing buyers with the ideal opportunity to get ahead on their mortgage.
On the other hand, property markets in Sydney and Melbourne do remain a key cause of the concern for the Reserve Bank. If these markets do pick up again, the Board may be forced into raising the cash rate in order to keep prices under control and prevent a property bubble occurring.
Many buyers are concerned that interest rates will rise next year and are already hedging their bets by fixing their home loans. If you have been thinking of reviewing or changing your home loan, the Christmas and New Year break may be the ideal time to do so.
Related: How to review your home loan