Reduction in building construction to fuel Brisbane’s recovery.

Here is an interesting article that makes a lot of sense to us at Hicks Real Estate.

Buyer’s agent Melinda Jennison is optimistic about the future of the Brisbane property market, provided that certain growth drivers serve their purpose.

While there were a lot of headwinds for the Queensland capital in recent times, particularly the impact of the royal commission and the federal election as well as the tightening of lending restrictions, Ms Jennison said that, over the next five years, Brisbane will be seeing significant growth in the housing market.

Among the factors that will spur growth in the capital city are rate cuts, a reduction in building commencements, population growth and employment and wage growth, according to her.

Following the rate cuts in June and July, which brought the official cash rate to a new record low level of 1.0 per cent, several experts predict another rate cut before the end of the year and early next year.

“With the second half of the year coming up, if we have one or two more rate cuts, that will provide further stimulus into the property market, and not just in Brisbane,” Ms Jennison said.

Across Brisbane, in particular, the 38 per cent reduction in building commencements over the last 12 months, along with the strong population growth within the region, will allow the apartment market to recover from oversupply.

According to the buyer’s agent: “That’s huge. We had an oversupply in the unit and apartment market recently and that seems to have been absorbed by the accelerating population growth into the region. We’ve got vacancy rates now declining in some of the inner-city locations.”

“Generally, if we’re looking at the fundamental drivers of property prices, we’ve got supply that’s going to be drying up and an accelerating population growth. If we can see some employment growth and wages growth, I think that we’ve got the perfect recipe for upward pressure on prices.”

Hotspots

At the moment, Ms Jennison assists both local and interstate buyers who are interested in capitalising on the Brisbane property market.

As a buyer’s agent, one of the tips that she typically gives her clients is to invest in “train line locations”.

“Brisbane is very widespread… There’s blue chip suburbs and fringe suburbs just on the outer areas of those blue chip locations. We know that, in some cases, there’s a price disparity between one suburb and the next, but train lines connect them,” she said.

“So, fringe suburbs with a train line are certainly locations that we’re looking at right now. They’re the types of opportunities that we’re locking in for our clients at the moment.”

Ms Jennison also pointed out opportunities in and around the new education precinct where the University of the Sunshine Coast will stand.

“Construction is well underway. A lot of the land has been rezoned and so we’re certainly still finding great opportunities in that region for investors that are in a price point under $500,000,” the buyer’s agent highlighted.

“We’re not going Logan or Ipswich, in those directions, for the simple reason that it’s all about supply and demand. The availability of future supply of land in the Moreton Bay region is a lot more limited than it is when you go west toward Ipswich or when you go south toward the Gold Coast.”

However, despite the advantages in certain regions, Ms Jennison reminds investors that the perfect investment will depend largely on their individual goals, capabilities and limitations, both personal and financial.

As such, she strongly encouraged investors to establish a good working relationship with local agents and other property professionals, where appropriate, in order to get a better understanding of the strategies and opportunities that could be right for them.

“It doesn’t always come down to one size fits all with property investing. It’s really important to understand what type of results an investor is looking for, whether it’s a capital growth or yield or a good balance of both. That will come down to their personal goals… Only then we can fit a strategy that works for an investor’s personal circumstances,” she concluded.

“We can also get a lot of off-market opportunities and help clients through the process. There are some great opportunities in the area, and we’re achieving yields upwards of 5 per cent in areas where capital growth for the last five years has been in excess of 5.5 [per cent] or 6 per cent per annum.”

Article originally published on Smart Property Investment