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After a difficult two years, the Brisbane property market is set for a modest recovery in 2013 and should record price growth of 3-4 per cent, the director of SQM Research, Louis Christopher, says.
Over the past three years, Brisbane house prices fell 6.3 per cent, SQM figures show. ”Most of those falls really happened in 2011,” Christopher says. ”And 2012 was really very much a flat year for the Brisbane market.”
The senior economist at Australian Property Monitors, Andrew Wilson, says the Brisbane property market has now hit ”the bottom of the price cycle”, and he too expects prices to recover this year, particularly in mid-priced suburbs within 10 kilometres of the city’s centre.
”The outer suburban areas are probably a bit more problematic,” Wilson says. ”There is still a little more stock on market … in those outer-northern suburbs, and investors would have to take more of a longer-term view about that.”
Australian Property Monitors data shows Brisbane house prices increased by 0.3 per cent in the three months to the end of December. Wilson says the figure, while small, is significant as it signals a revival in activity after a lengthy period of price falls.
This year’s price rises are expected to be underpinned by improved buyer and seller confidence, partly driven by lower interest rates.
In other positive news for investors, Brisbane’s rental market remains relatively tight, with a vacancy rate of 1.9 per cent. A vacancy rate of less than 3 per cent is considered to favour landlords.
”Gross rental yields in Brisbane are plus-5 per cent for both houses and units, and that’s one of the best results of any of the capital cities in Australia,” Wilson says. ”We are certainly seeing increased activity by investors.”
Christopher says that between January and October 2012, median rents rose by more than 3.5 per cent for all dwellings in Brisbane, however, they have flattened over the past 90 days.
Kevin Turner, the director of realestatetalk.com.au, lives in Queensland and is keeping a close eye on Brisbane City Council’s draft City Plan, which identifies three growth hubs: Chermside, about 13 kilometres north of Brisbane’s centre; Indooroopilly, 8 kilometres west of the city; and Upper Mount Gravatt, about 14 kilometres south-east of the centre.
”I’d actually be looking at investing in those three areas; that’s where
the major growth – the major infill – is going to be happening,” Turner says. The draft plan allows for higher densities.
”The traditional block size in Brisbane is 600 square metres, and the Brisbane City Council [is] looking at relaxing that to allow two or even three houses on a block that size in certain areas,” Turner says.
Turner believes Brisbane will continue to benefit from the resources sector for many years as a hub for fly-in, fly-out workers.
Christopher says suburbs around Wynnum and Manly, about 20 kilometres east of the city centre and close to Moreton Bay, are worth looking at as vacancy rates are tighter at 1.5 per cent.
”In the past 90 days, the median price of units in east Brisbane rose 7.5 per cent,” Christopher says.
Wilson says Brisbane’s middle-ring suburbs – within 10 kilometres of the city – with properties priced between $450,000 and $600,000 offer good prospects for capital growth and rental returns.
For investors looking at units, he favours inner-city New Farm, Newstead and nearby Hamilton. ”There has been quite a lot of investor activity there with new apartments. They’re getting some quite healthy growth returns,” Wilson says.
Young families and professionals are being drawn to those suburbs because ”they’re developing quite an interesting inner-city cosmopolitan apartment-type lifestyle around them”.
For houses, Wilson likes areas including Chermside, The Gap, Grange and Kedron, which are all to the north or north-west of the city centre. He is also watching suburbs adjacent to Indooroopilly in the west.
”These sort of areas, which are very solid middle-ring suburbs, represent good-value opportunities for buyers at the moment and … they will get good solid returns on rentals.”
Wilson says the suburbs have ”high levels of residential infrastructure, reasonable proximity to the CBD and good transport”.
A sales manager with McGrath Estate Agents, Thomas McGlynn, who specialises in the Brisbane suburb of Paddington, says while larger developments remain difficult to get off the ground in Brisbane’s inner suburbs, boutique developers are beginning to return to low-rise townhouse complexes, usually with five or six townhouses.
McGlynn is seeing buyers for Brisbane’s inner-city areas from NSW and Victoria and says that at the end of last year, there was a rush of interest, which has now slowed. In the inner suburbs, McGlynn says he saw demand for rentals accelerate in the lead-up to Christmas, with strong inquiries from families moving to Brisbane from interstate who were keen to try areas before they bought.
”We had an absolutely cracking run at the end of last year, and again at the start of this year, where, across all rental price brackets, properties were very, very popular,” McGlynn says.
Among McGlynn’s picks for top suburbs is Toowong, which is on the Brisbane River about five kilometres west of the city. ”It’s a very exciting area simply because it has good access to the city,” he says. ”It has access to the university, but also has its own commercial hub. Toowong is actually a very vibrant, buzzing suburb at the moment.”