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The reasons behind Brisbane’s lagging property market: Macquarie Wealth

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Are you interested to invest in properties? Well, Brisbane, along with Queensland’s regional property markets, continue to lag other states this property cycle, according to Macquarie Wealth Management.

The reasons behind Brisbane's lagging property market Macquarie Wealth

“Brisbane is still very much the laggard for this cycle given the sluggish domestic economy, with periodic price falls still common particularly for the Brisbane unit market,” Macquarie’s latest report noted.

It was in part because Queensland continued to show population growth moderation as the recent mining boom subsided.

The lagging occurs even as prices emerge back into recovery and should exhibit strong price growth into 2015, it noted.

“There are clear macro reasons behind this slow recovery, due to weaker domestic growth and the slow pace of interstate migration out of both Sydney and Melbourne,” the report said.

“Affordability levels in Brisbane are relatively good, given the recent price correction, which will offer a relatively larger buffer when mortgage rates eventually impact more significantly on affordability and pricing.”

Macquarie’s concerns relate to what it sees as “sluggish interstate migration and rising supply”.

Noting the surge in construction activity in 2014 in Brisbane, it did concede that Brisbane had not seen meaningful supply additions for some years.

“As the mining investment cycle unwinds, both foreign and interstate migration into Queensland is slowing significantly – a trend that will tangibly reduce housing demand in these regions,” it added.

Macquarie described the Australian residential housing market cycle as unfolding “largely as we expected”.

“Low rates and good affordability had bolstered a moderate price upswing in 2013, initially out of Sydney (after 10 years of subdued gains) before it broadened out to Perth and Melbourne and finally to Brisbane, the clear laggard in this recovery cycle,” the report noted.

“By late-2014 and into 2015, the stimulatory impacts from low rates have been largely realised.

“While further price gains ahead are still expected, the pace of growth is likely to be slower over the remainder of this upswing cycle.

“Medium term, the fundamental drivers of the Australian housing market are less favourable, but still firm overall.

“Housing demand is well supported, given solid migration, although that pattern of growth is still shifting clearly from resource-intensive states of Western Australia and Queensland back to the larger, more diversified states of New South Wales and Victoria.

“Developers are lifting supply in response, driving a surge in approvals and starts initially for units and apartments, but that supply is now broadening into detached housing as well.”

Meanwhile Brisbane’s off the plan apartment market has smashed its previous quarterly sales record with 1,621 unconditional transactions in the three months to December 2014.

The results as reported in Place Advisory’s quarterly unit report equated to more than 135 off the plan sales a week in the inner-Brisbane market.

Place Advisory noted that level of quarterly sales outstripped the records set during the previous cycle, where 1463 unconditional sales were recorded in the June 2002 quarter.

Place Advisory noted that AMP Capital and Billbergia’s Skytower was Brisbane’s top performing project for the quarter with a registered 415 apartment transactions in total.

Place Projects director Bruce Goddard said the result showed Brisbane was experiencing an unequivocal boom in apartment buying.

“With approximately $2.4 billion worth of new and off the plan residential sales recorded during the year 2014, it shows the Brisbane residential market remains in massive demand consistently city-wide,” Goddard said.

Apartments sold during the quarter showed a weighted sale price of $551,558 up from $545,478 in the threes months to September 2014.

Place Advisory director Lachlan Walker said he didn’t believe these sales rates were sustainable longer term.

Source: propertyobserver.com.au

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Auction tips: Why and when you should auction

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WHEN it comes time to sell your property, the age-old argument of auction versus private treaty naturally comes to the fore.

There is no one best practice but the general consensus among property professionals is both type of housing and market confidence play pivotal roles.

Core Logic RP Data auctions spokesman Kevin Brogan crunched combined capital city data over the 12 months to November 2015 and found higher valued and more unusual properties were taken to auction.

“If you have a house in a street and there are 10 others like it, you have a pretty good idea of what it’s worth,” Mr Brogan said.

“But if it’s unique or unusual you might not be able to pick what it’s worth so you take it to auction on the proviso there’s enough interest.

“Looking at the combined capital city data over the past 12 months to November, you see the general median price of houses that sold at auction is about $950,000.

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Brisbane’s Moreton Bay gaining strength: Terry Ryder

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Brisbane's Moreton Bay gaining strength: Terry Ryder

The latest event in the evolution of the Brisbane market is the strong emergence of the Moreton Bay Region in the far north of the city.

It has joined Logan City in the far south as the precinct with the most momentum in the Greater Brisbane area. Meanwhile, Ipswich City in the south-west is putting its hand up as well.

Most national commentators misunderstand what’s happening with the Brisbane market. They look at that single figure which apparently describes the whole Brisbane metropolitan area and conclude not much is happening. Australian Property Monitors says Brisbane prices rose 5% last year while CoreLogic RP Data says 4%.

But beneath that one generalised (and highly misleading) figure, there has been lots of activity in precincts which have recorded double-digit annual growth in median house prices.

Markets in the Greater Brisbane area have been on the move for about two years. The inner-city suburbs were busy a couple of years ago and then the middle-ring suburbs on the northside surged. Many of them had annual growth in the 13% to 15% range. The middle-ring suburbs on the southside joined the party 12-18 months ago.

Now it’s the outer-ring areas that are leading. There are still rising suburbs in those northside and southside middle-market precincts, but it’s the cheaper areas on the outskirts that have the greatest activity and momentum.

In this regard, Brisbane is displaying the same pattern we have seen over the past three years in Sydney and Melbourne – the upturn started in the near-city areas and gradually gravitated outwards from the centre. The Ripple Effect is alive and well in residential real estate.

In Brisbane, Logan City (which is the urban bridge between Brisbane and the Gold Coast) has been  the market leader in terms of sales volumes for the past 12 months or so. But now it’s counterpart in the north, the Moreton Bay Region local government area (which is the urban bridge between Brisbane and the Sunshine Coast) has mounted a challenge.

Like Logan City, Moreton Bay Region is all about affordability, transport infrastructure and jobs nodes. Many of the suburbs of Moreton Bay Region – including Caboolture (the capital suburb), Morayfield and Deception Bay – have median prices in the $300,000s, while Burpengary and Narangba are in the low $400,000s.

These are high-volume housing markets: Caboolture, Deception Bay, Morayfield and Narangba have each recorded over 340 house sales in the past 12 months. Some have seen median prices rise 6-7% in the past year – but, in terms of price growth, they’re just getting started.

Median rental yields are an attraction for investors, ranging from 5.2% to 5.6% in most of the suburbs of the Moreton Bay Region.

The LGA includes the Redcliffe Peninsula, which has heightened appeal because the long-awaited Moreton Bay Rail Link will be completed this year.

The overall region has improved amenity through the evolution of the North Lakes master-planned community, which includes major retail (and will soon include an Ikea superstore).

The region also has good proximity to Brisbane Airport, the Port of Brisbane and the Australia Trade Coast industrial precinct, which means plenty of jobs are handy to the suburbs of Moreton Bay Region.

 

Originally Published On: http://www.propertyobserver.com.au/

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Illegal homes sell-off will not affect market

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THE property industry has backed Treasurer Joe Hockey’s plans to force 500 foreign home owners who breached investment rules to sell their properties.

Mr Hockey said an investigation into foreign investment had found the homes, worth a total of $1billion, were bought outside the investment rules.

He said among those found were overseas students – “some who had never filed a tax return have bought properties worth $5 million”.

Property Council of Australia chief Ken Morrison backed the move, but said it would not do anything to address housing affordability.

Mr Morrison said the sales were a “drop in the ocean” and far too few to impact the market.

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