“All of the fundamentals are in place for Brisbane’s property market to experience a bumper run”
The old saying goes that good things come in small packages.
When it comes to property investment potential, I think some very promising things are on the horizon for Brisbane’s smaller house prices.
The Queensland capital boasts some of the most affordable metropolitan real estate in Australia.
But there’s an odd investment psychology that big prices equal bigger future return potential, and cheaper is undesirable.
It’s as though we’re programmed to believe that you get what you pay for, and more is better, rather than scoping out the deals that offer the best upside.
For years, investors have been concentrating heavily on Sydney and Melbourne in search of those widely reported double-digit annual returns.
Good old Brisbane has flown under the radar as a result, but as we’ve seen over the past several months, growth in southern cities has slowed and those high-priced properties aren’t as shiny as they once were – albeit until the market cycle kicks into gear once again in the future.
Attention is already starting to turn to Brisbane as a result, thanks to its lower comparative entry point, and it’s this affordability that’s going to drive the market.
A very attractive option
Let’s say you had a budget of between $300,000 to $500,000 for a solid house with good future prospects and a strong rental return.
You’d be pretty hard pressed to find any candidates in Sydney or Melbourne these days. Yet browsing the offerings in Brisbane will leave you spoilt for choice.
We’re on the ground day in, day out identifying areas and properties that are ripe for future growth. We see what people migrating from interstate to Southeast Queensland see – you get so much more bang for your buck up here.
Contrary to that ingrained perception, affordable doesn’t have to mean undesirable either.
These are areas people want to live in. They’re close to good schools and serviced by reliable transport links and the lifestyle amenities are attractive, too.
And from an investor’s perspective, demand is growing, and you can get a five to seven per cent yield. What’s not to like?
It’s a very similar scenario to our successful investment strategy in Victoria in recent times.
About 18 months ago, we purchased a solid house in Carrum Downs in Victoria for a client for just $345,000. That property has increased in value by about 60 per cent since that time to now be worth $550,00.
Likewise, 14 months ago, when we purchased another home for $438,000 there, which now has more than $102,000 additional equity courtesy of a 23 per cent price uplift.
The Sunshine State is bright
After years of stagnated growth, Queensland’s economy is strengthening, and business confidence is on the rise as a result.
You can feel an energy in the air. The gears are finally moving again, and people have a renewed sense of optimism.
That classic outdoor lifestyle – beach, barbeques, a relaxed pace, lazy afternoons at the park – continues to lure new residents to Queensland, and in particular the southeast pocket. The state’s population hit five million this year, fuelled by strong migration.
Brisbane is one of the country’s fastest-growing cities. Demand for housing is high and construction of new dwellings isn’t keeping up with the pace of required supply. This means forecasts of good future price growth.
All of the fundamentals are in place for Brisbane’s property market to experience a bumper run.
Build your 15-year plan
Brisbane is an attractive investment target, that’s for sure. But don’t expect to jump in and make your fortune in a year or two.
Not only is that a risky approach in virtually any location, but it’s unsustainable and unrealistic in this current real estate climate.
Now, more than ever, investment should never be a short-term game. That’s called gambling and you’d be better off putting your cash through the pokies and hoping for the best.
Property is economics and the strategic way to minimise your risk and maximise your potential growth is to devise a 15-year plan.
Carefully research the growth drivers of your assets, prepare for market cycles, put your money to the smartest use possible and then hold for the long-term.
This is always the best way of building a portfolio that generates cash flow and equity over time.
As an investor, you want to be in it for a good time, not a short time.