Residential prices in Australia rose by 3.7% during the first quarter of 2017. Sydney and Melbourne continue to house the most expensive real estate properties in the states of New South Wales and Victoria respectively. The median property price in Sydney is $950,000 while it is $710,000 in Melbourne. At these prices, no wonder Australians still find it difficult to live the “Great Australian Dream” of buying a home.
But conditions may be right for you to consider investing in Brisbane real estate instead of Sydney or Melbourne.
Here are 3 reasons why you should keep an eye out for Brisbane real estate:
Property Price Differentials. The increase in real estate prices in properties located in the states of New South Wales and Victoria have created significant property price differentials with those located in Queensland.
The median price of a house in Sydney is 2.2 times the median price of a house in Brisbane. Meanwhile, the median price of a house in Melbourne can buy 1.5 times the median price of a house in Brisbane.
Historically, these price differentials have led to an increase in interstate migrations.
Increase in Population Flows. It is estimated that interstate migrations will average an increase of 20,000 to 25,000 population flows to Queensland every year.
The increase in population flows is expected to provide a major boost to the economy of Queensland which recently benefited from the resurgence of its mining sector.
Increase in Housing Demand. Another beneficiary of the increase in population flows is the demand for housing.
Presently, Queensland has 68,000 dwellings under construction. Even though annual dwelling completions increased to 42,000, Queensland’s population rose by just 1.4% or 65,000.
The combination of these factors resulted in a decline in dwelling intensity which weighed down real estate prices and rental rates. The expected increase in population flows may help balance out supply and demand forces and ease up concerns on excess housing supply.
Assuming an average of 2.5 persons per household, an increase of 20,000 to 25,000 population flows due to interstate migration will result in an upward adjustment of 8,000 to 10,000 new residential dwellings per year.
According to the Real Estate Institute of Queensland (REIQ), the median property price of housing in Brisbane was $632,000 in December 2016. Brisbane real estate has increased by 14.2% over the last five years.
However, an oversupply of new dwellings and lower population growth will continue to put downward pressure on Brisbane real estate prices. These conditions will continue to open up opportunities for investors to buy property in Brisbane before the anticipated inflow from interstate migration starts to assert upward pressure on housing prices and rental rates.