How is the Brisbane housing market expected to fare in 2019?
You'd be forgiven for thinking that it's all doom and gloom for Brisbane properties, after 2018 saw our two biggest markets - Sydney and Melbourne - get a case of the chills. This is largely due to their relative unaffordability - a factor that has actually helped Brisbane, where the median property price in 2018 was just $485,000.
But despite driving many home owners and investors alike to the state to bask in the sun and chase cheaper property prices, can interstate migration and year-round sunshine keep Brisvegas going in 2019 and beyond? Let’s find out.
What did the Brisbane real estate market look like in 2018?
In any other year, you could characterise Brisbane’s performance over 2018 as tepid, but compared to the slowdown being experienced in Sydney and Melbourne over the last year, this can be upgraded to ‘steady’.
SQM’s Housing Boom and Bust report has recorded the Brisbane market up +0.4% in the 12 months leading to October 2018. In the eyes of the Real Estate Institute of Queensland (REIQ), Greater Brisbane house prices were up 2.3% to $525,000 in the last quarter of 2018. While according to QBE’s Australian Housing Outlook 2018-2021, the Brisbane median house price at June 2018 was $552,300 and units were at $427,000.
CoreLogic’s Daily Home Value Index recorded Brisbane posting a 1.2% increase in the median house price for the year to August 2018.
Those figures wouldn't normally be considered positive, but 2018 has seen somewhat of a recalibration in expectations as investors absorb the impact of a downturn in the country’s two largest property markets.
So what are the experts predicting for the year ahead?
Brisbane growth predictions for 2019
The Real Estate Institute of Queensland (REIQ) is optimistically forecasting a, “...steady growth forecast due to rising population, improving employment rates and better lending conditions” for the state in 2019.
Greater Brisbane’s apartment market is also tipped for positive growth by REIQ. They put this down to apartment supply slowing - with only 5000 apartments due for completion in 2019, down from close to 11,000 a few of years ago. This means demand will continue to rise while rents should improve and vacancies will decline.
QBE’s Australian Housing Outlook 2018-2021, on the other hand, is more cautious and predicts slow and steady growth for the Brisbane real estate market. This is largely down to the oversupply in city apartments, which they expect will take until 2021 to be absorbed by the market. They do, however, forecast houses to perform strongly, predicting median house prices to grow 11% by 2021 to around $615,000.
SQM’s Louis Christopher forecasts Brisbane to be more stable than other capital cities in 2019, and lays out a number of scenarios that have the property market posting figures between -2% to +5%. He factors in a number of possible events including a rise in interest rates, a Labor government and a slowing economy into his forecast.
Best suburbs to invest in Brisbane in 2019
If you are looking for suburbs to research or invest in 2019, it's often useful to look at which areas performed strongly last year.
According to the Real Estate Institute of Queensland (REIQ) 13 of Brisbane’s suburbs made the list of top performing postcodes in the state. Hamilton was the strongest performer in the city, where house prices increased 32.9% in 2018, to a median value of $1,442,000, ranking the suburb the most expensive on the list. Other Brisbane suburbs with capital growth of 10% or more include Sandgate, Paddington, Mount Ommaney, Sunnybank, Graceville and Seven Hills.
It's also worth doing your research on Brisbane’s outer ring suburbs which are not only affordable, but have been posting stronger returns than other parts of Brisbane metro. Here the entry level price of a house is $530,000 – $600,000. Contrast this to an entry level price of $800,000+ in the city's inner ring suburbs.
CoreLogic identifies north Brisbane as an area to watch - where a trifecta of affordability, low vacancy rates and attractive rental yields combine to make it an attractive investment prospect. They also highlight the suburb of Kurwongbah, which recorded median house price growth of 21% in early 2018, as well as Chermside which has an affordable median house price of $615,000.
Brisbane rental market and rental yields
The good news for landlords - current and future - is that rents are on the way up in Queensland. Brisbane also has some of the highest rental yields in the country.
CoreLogic’s Brisbane market update for December 2018 puts the weekly rent for a house at $415 and $385 for a unit, with a gross rental yield of 4.2% and 5.3% respectively. SQM has very similar figures with the gross rental yield for houses at around 4% and units close to 5%.
Should you invest in Brisbane houses or apartments?
Many investors ponder if a house or apartment will offer the best prospects for long term growth. The short answer is, there is really no magic formula - both types of properties can perform. The trick is to buy them at the right time, in the right place for the right price. Easier said than done!
Over the medium term, Brisbane houses have actually been a better investment, with apartments recording a drop of -4.1% year-on-year to September 2018. This is in contrast to houses which are up 2.7% over 2018. In this context you do need to be aware of the phenomenon of apartment oversupply in any market, and Brisbane is no exception.
The Reserve Bank of Australia (RBA) recently compiled a national ‘blacklist’ of postcodes where this could be an issue, with Brisbane City, South Brisbane and Fortitude Valley making the list. This is however a localised phenomenon, and CoreLogic’s Tim Lawless believes much of the unit supply has now been absorbed in Brisbane.