What about me?

Does Size Really Matter?
August 30, 2017

“Brisbane is tipped to have the strongest property market in Australia in the next few years”

If you’re like me and you have invested in the Brisbane property market recently you’re probably looking at the Sydney and Melbourne markets and thinking ‘what about me?!?’

Well fear not because every market has it’s day so to speak and Brisbane will have it’s time in the spotlight and outperform (remember Perth a decade ago?). Not that Brisbane has been doing badly mind you. Pockets of Brisbane have done exceptionally well, others not so well. Certain types of properties have outperformed others. If you have invested in a high quality property within a high demand location where supply is not a drag on performance then you should be very pleased, particularly with yield (especially compared to Sydney and Melbourne). But with the astronomical growth we’ve seen in Sydney and Melbourne it’s hard not to be a tad pessimistic. But don’t be!

Don’t just take my word for it, have a read of this article to see why Brisbane is tipped to outperform in the next few years.

Brisbane was also delivering the strongest returns for investors with rental yields of 4.1 per cent for house and 5.2 per cent for units, higher than Sydney, 2.8 per cent and 3.7 per cent and Melbourne, 2.6 per cent and 4.2 per cent.

The Brisbane property market has had a unique experience this past decade, it’s been hit by two massive flood events (in addition to the GFC) and prior to that it lagged in terms of new residential development. Then all of a sudden there was a construction boom from 2013 to about 9 months ago. A lot of new product has hit the market and that takes time to be absorbed by purchasers and renters. In 2017 new construction has fallen off the cliff, a result of a tightening of lending by the banks for new projects, a tightening of lending to investors and a very competitive market. This dramatic drop in supply will continue into 2018 and 2019. That’s not just our own supply data that suggests this but also what we’re hearing from those on the ground, developers.

On the demand side, Brisbane will continue to be a very appealing city to move to and as the economy gets stronger and employment picks up you will see a consequent steady rise in capital growth fueled by population growth. Beyond that, the growth will be further enhanced by the massive amount of world class infrastructure projects currently underway in and around the city.

As with every growth asset, the best results happen over the long term. Our clients who invested ion Sydney in 2008-2010 didn’t see strong capital growth in the first couple of years of their investment, we got them in before the market took off in 2012 and those who have held their Sydney investments have done extraordinarily well, more so than those who invested in Sydney after the growth was well and truly under way. We believe the same will be true for our clients who have invested in Brisbane these past couple of years. You may not be shooting the lights out now but give it time. Property investment is a 10 year + endeavour.

The future is very rosy. The best is yet to come.

Happy Investing!

PS – Contact Aviate for a copy of our Brisbane Investment Fundamentals fact-sheet.

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