Could it be that Queensland is on the rise again? A number of factors suggest that it’s time for savvy property investors to take a closer at look at the Queensland property market. The pre-GFC Queensland property story was defined by its above national average economic and population growth, a massive and transformative pipeline of multi-billion dollar infrastructure projects and a value for money investment proposition. Combined with significant job creation and the state’s ‘quality of life’, interstate and international migrants came in droves to the Sunshine State.
Queensland enjoyed some stellar growth in residential and commercial property values in the years just prior to the GFC. However, with the collapse of Lehmans in 2008, the Queensland property market began its descent from a considerable height.
Meanwhile, the mining and resources investment super cycle resulted in significant funds flowing to the Queensland State Government coffers and provided thousands of construction workers with highly remunerated jobs. The economic stimulus enjoyed by the state insulated Queensland from much of the impact of the GFC.
With the peak of the resources boom now over, a very real opportunity exists to accelerate the performance of the Queensland property market. Over the past two years, Queensland hasn’t enjoyed the sharp increase in residential property values experienced by the southern capitals. However, there are indications that an upward trend has already started.
The Queensland Government is sending a clear signal to foreign investors to consider Queensland. It says it will not introduce taxes on foreign property investors nor stamp duty surcharges for foreign investors who purchase Queensland houses. This gives Queensland a comparative advantage over Victoria, which now levies a 3% stamp duty surcharge for applicable homes and will increase land tax by 0.5% from 2016 for offshore-based investors.
There is also evidence of positive change in the Brisbane and Gold Coast apartment market. The most accommodating borrowing environment in Australia’s history, together with firm rents, low vacancy and the desirability of inner city living, have led to increased investor demand.
Dwelling prices have remained relatively stable in Brisbane while rents have firmed. Yields for Brisbane apartments are above the national average. Interest from offshore buyers is strong, as price growth in Sydney and Melbourne has eroded gross yields in those markets.
Macroplan research indicates that there are more than 37,000 apartments in the development pipeline in Brisbane’s inner ring of suburbs (a five-kilometre radius from the city centre). Such development activity in this location is unprecedented. In the past year, approximately 4,000 new units sold, with roughly the same available for sale. Levels of demand and supply are around twice the averages recorded over the past 10 years.
From an international investor’s perspective, Brisbane represents a price advantage over comparable Australian and international cities. Median prices in Latest Core Logic RP Data - Rismark statistics for June 2015 show a revealing price differential between Brisbane and the southern state capitals. The median house price for Sydney is $880,000, Melbourne $620,000 and Brisbane $490,000. The respective median unit prices are $638,000, $480,000 and $393,000.
Queensland is also experiencing significant investment in major infrastructure. MacroPlan research suggests there are currently more than $40 billion worth of projects in the pipeline which potentially represents some 50,000 new jobs. The Gold Coast alone has almost $14 billion in major infrastructure projects planned or underway.
With a lower Australian dollar, tourism represents another area where significant potential can be realised. For places such as Cairns, the Gold and Sunshine Coasts and their hinterlands, this represents a major opportunity for investment to play a lead role. Queensland development sites also offer scale, which is attractive to many developers.
Queensland’s centres, such as Brisbane and the Gold Coast, have a more streamlined planning system than the southern capitals where multiple planning authorities make the development approval process more complex and less user-friendly.
In the overall picture, a number of research institutions and the Australian Bureau of Statistics are pointing to strong economic and population growth forecasts for Queensland, outpacing national averages.
Taken together, the message is clear: Queensland is embarking on a new growth curve.
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