The general coverage from the national press now regarding the Australian property market is negative.
This is to be expected given the Banking Royal Commission, and the gloomy state of Sydney and Melbourne, which is the lense in which the nation is generally viewed through.
However, when looking at the market through a Brisbane lense, we see further growth.
In the Brisbane market, it is acknowledged that affordability and lifestyle drivers are currently better positioned than ever. However, the sentiment around the Brisbane apartment market and future employment prospects are often misunderstood.
Mosaic’s Director of Research & Strategy, Mr Peter Bell states that the feedback from people who have experienced multiple property cycles in Brisbane and South-East Queensland is universally along the lines of:
“sentiment is continually improving, baffled why this improvement is not evident in the data as yet, but remain intuitively confident that it’s not a matter of if the Brisbane market will grow……it is simply a matter of when”.
“Now is the time you want to be holding real estate in Brisbane and South-East Queensland. It is worth noting that we are not alone in this view, as the chart below indicates from the latest housing forecast report completed from CoreLogic-Moody’s released in June 2018,” Mr Bell said.
SQM Research recently reported its vacancy rate index for May 2018. These figures indicated that greater Brisbane’s vacancy rate was now at 2.9%, down from 3.5% the same time last year.
“Whilst there are still some challenges in very specific inner-city locations that consist of large volumes of high-rise apartment stock targeted at investors, the wider market is not being as adversely impacted as many incorrectly perceive,” Mr Bell said.
In comparison, Sydney’s vacancy rate is now 2.5%, up from 1.7% the same time last year.
“It could be hard to imagine but if these current trends continue, Sydney will have a higher residential vacancy rate than Brisbane in the not too distant future,” Mr Bell said.
Vacancy rates remain one of the best indicators to track the supply and demand equation in real estate markets.
The surge in residents in Queensland is being driven by affordability and lifestyle in Queensland in comparison to Victoria and New South Wales.
On an annualised basis, 22,500 people moved to Queensland for the year ending December 2017. This is the highest growth achieved over the past decade.
During the December 2017 quarter, approximately 7,730 people moved to Queensland from other locations in Australia, with a significant portion coming from New South Wales.
This positive migration to Queensland is forecast to continue as result of upcoming infrastructure pipeline and subsequent improvement in employment opportunities.
The recently released Queensland State Budget 2018-2019 highlighted that $45.8 billion is allocated to infrastructure and capital works, representing the largest commitment since 2011.
The Budget allocates large budget to a range of infrastructure project proposed for Brisbane which will drive future job creation and economic prosperity.
“Whilst this strong infrastructure investment pipeline is not yet reflected by an improvement in employment conditions or increased residential demand for Brisbane or South-East Queensland market sentiment and logic would strongly indicate this is now only a matter of time,” Mr Bell said.
The below BIS Oxford Economics chart illustrates publicly funded transport infrastructure spending on projects of $2 billion or more in value.