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3 Reasons Why You Should Invest in Brisbane Property over Sydney or Melbourne

3 Reasons Why You Should Invest in Brisbane Property over Sydney or Melbourne

If you’re thinking of buying real estate property in Australia, most likely Sydney and Melbourne are on top of your list. These 2 cities are widely recognized as the centers of business in Australia and are popular tourist destinations.

But here are 3 reasons why you may wish to consider investing in Brisbane over Sydney or Brisbane:

1. Higher Population Growth

Presently, Brisbane is in a situation where it has an over-supply of dwellings. In the 3rd Quarter of 2016, Brisbane had 68,000 dwellings under construction. However, the population increased modestly by 42,000. Overall, Brisbane’s population grew by only 1.4% from 2015 to 2016.

Slow population growth combined with a surplus in dwellings has dampened increases in property prices the past 2.5 years (See Fig. 2).

But all of that is about to change.

 

Fig 2 Population & migration: regional swings – After growing at a significantly faster pace over most of the last decade, Qld & WA population growth rates have slowed markedly, whilst surging net migration flows into NSW & Victoria have driven a lift in population growth in Australia’s South East. 

Price differentials have increased between Brisbane and its counterparts from the South, Sydney and Melbourne. The differences in pricing have grown to a point whereby property in Sydney and Melbourne could buy property in Brisbane by 2.2 times and 1.5 times respectively (See Fig.1).

 

Fig 1 House price relativities – Price differentials between Sydney and Melbourne, relative to Brisbane, have reached stretched levels, which have historically been followed by multi-year reversions. 

Put simply, prices of real estate in Sydney and Melbourne are no longer affordable that investors and property buyers are looking for better deals elsewhere. Brisbane appears to be the preferred destination.

It is expected that interstate migration from South to North will bring in an estimated 20,000 to 25,000 people to Brisbane annually. Assuming 2.5 persons per household, the additional population inflow could increase housing demand by 8,000 to 10,000 per annum (See Fig. 3).

 

Fig 3 Migration contribution to population growth – NSW & Victoria are currently receiving almost double the long-run average contribution to population growth from net migration. Above-average net overseas migration inflows are being bolstered by positive net interstate migration (combined basis). 

2. Improving Employment Conditions

Job opportunities for full- time and part- time work have been consistently rising in Brisbane. Although Sydney and Melbourne continue to account for the significant majority of employment growth in Australia, Brisbane is not far behind.

As you can see from the chart below, in 2015, Brisbane generated more employment opportunities for full-time work than Melbourne and was only slightly behind Sydney.

Labour statistics provided by the Queensland government have identified the following industries as growth centers for employment in 2016 – 2017:

  • Health Care and Social Assistance
  • Professional, Scientific and Technical Services
  • Construction
  • Mining

3. Increased Investments in Infrastructure

Investment in infrastructure projects are also powerful drivers of economic growth which of course has exerts upward pressure on real estate property prices.

Many investment projects in Brisbane have been fast- tracked in Infrastructure Australia’s Priority List. Included in the list are the following projects:

  • Cross River Rail
  • Bruce Highway Upgrade – Caloundra Road to Sunshine Motorway
  • Gateway Motorway Upgrade North

These 3 factors lead to one conclusion: the time to buy property in Brisbane is now while prices are considerably affordable.

Once interstate migration is in full swing, you should expect Brisbane real estate prices to start climbing. Employment, particularly in the mining sector, is robust as coal prices have continued to enjoy high demand.

Of course, the construction of the Brisbane Airport’s second runway will be a big boost to the economy. Brisbane Airport is the largest airport in Australia in terms of land area and currently, employs 21,000 people (See Fig. 5). It is estimated to employ 50,000 people by 2033.

 

Figure 5: Brisbane International Airport Expansion Project

If you want some assistance in your investment property aspirations, please give me a call at 02 9522 3000 or drop me an email at john@hunterwood.com.au.