It might be time to buy in the Brisbane property market. Spurred on by the prospect of future growth and concern about the lack of quality assets elsewhere, investors are flocking to Brisbane.
In 2016, vacancy rates in Brisbane hit 16.9 per cent, prompting landlords to entice tenants with high rental incentives. But this is changing.
In July, a report from BIS Oxford Economics Residential Property Prospects 2019 to 2022 indicates that Brisbane is going to have the largest rise in house prices in the country.
The greatest expected improvement in house prices, it seems, is not Sydney and Melbourne but Brisbane, although according to the report, the rise of the Brisbane property market is not going to be immediate.
Coupled with an oversupply of dwellings in the other states and the lack of quality stock elsewhere, an acceleration in price growth seems inevitable. As Luke Billiau of JLL Property said, “If you take a dozen buyers, six are here[Brisbane] because of how tight Sydney and Melbourne are.”
Much infrastructure is already in the works, and anticipation seems high. Investors are encouraged by Brisbane’s recovery, and the decrease in vacancy rates is encouraging both local and overseas investors.
“The spread between Sydney and Brisbane at the moment is primarily there because of vacancy risk in these [Brisbane] assets. And that’s decreasing so as a result, you’d expect yields to come in,” said Mr. Billiau, who brokered a deal between Centuria and US-based property group Hines for the acquisition of IBM Tower in Brisbane.
The acquisition is expected to yield a 6.25 per cent in the 2020 financial year to 6.5 per cent in 2021 FY.
The joint chief executive of Centuria Jason Huljich said they’re expecting Brisbane property market to “ramp up” six months from now, even though the growth in the office market is sluggish.
Mr. Huljich said, “Brisbane has been a bit stubborn over the last two years. We bought assets a couple of years ago, and we did believe that that market would turn a bit quicker.”
“But everything is starting to go the right way. Brisbane has really good net absorption, so we’re not too far off seeing some good effective rental growth coming through,” he said.
The latest data from CoreLogic suggests the same. Brisbane recorded a good increase in dwelling values in September.
Sydney, Melbourne, and Canberra are the other cities that recorded a monthly gain. Sydney and Melbourne’s dwelling values increased by 1.7 per cent over the month, while Canberra showed an increase of 1 per cent, same as Brisbane.
So whether you are a first home buyer or seasoned investor, this might be a good time to invest in the Brisbane property market.
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