Why The Current Brisbane Property Boom Concerns Me
3 Things Every Investor (Especially from Sydney and Melbourne) Needs to Be Aware Of
There is currently lots of data and lots of reports about the fact that the Brisbane property market will be the strongest performing property market for the coming few years, whether it’s articles like the Brisbane market will lead Australia’s property recovery for the next few years or whether it’s BIS Oxford Economics talking about the Brisbane market being the strongest performer with growth rates of 20 per cent and even more in some suburbs.
So we’re seeing a lot of data out there.
And if you’ve been following my work you know that I’ve been talking about the Brisbane market for quite some time.
In fact some of the criticisms that have been levelled at me was when people as early as in late 2016 / early 2017 found out that I was talking about the Brisbane market being the strongest performing market for capital growth over the coming few years and that people looking for capital growth should not be looking to buy in Sydney and Melbourne market.
That was as early, as I said in late 2016, even earlier than that in fact and definitely in early 2017. And I copped a lot of criticism for that, but we know that the Sydney market reached its peak in July 2017 and it’s been dropping like a stone since then and the Melbourne market reached its peak in November 2017 and has also been dropping.
Now thankfully with the two recent rate drops the rate of price falls is slowing down, the market is starting to find its floor, and I’m expecting over the next couple of years the Sydney and Melbourne markets will perform better than they have over the last couple of years.
But with all this data now and media reports backing up what I’ve been saying for a couple of years about why the Brisbane market will be the strongest performing market for capital growth, why would I then be worried?
Well it’s because I’m seeing lots of people right now who are thinking that they can invest in Brisbane especially people from Sydney and Melbourne, they want to invest in Brisbane for capital growth which is a smart move but they’re not doing their research correctly.
So one of the things I’m seeing people do is they’re going, well in Sydney and Melbourne units went up in value. Units are cheaper than houses. So I’m going to buy a unit in Brisbane.
Yet we know that CoreLogic has showed us that one third of units sold at a loss in Brisbane and I’m not expecting the unit market in Brisbane, the inner-city unit market to do very well over the coming few years. So you’ve got to be careful that you don’t apply a Sydney and Melbourne paradigm to the Brisbane market. That’s number one.
Number two, I’m seeing Sydney and Melbourne property investors go and by older properties on larger blocks of land thinking that’s the better move without realising that in certain areas those properties are not in high demand whatsoever, that people are going to struggle to get them rented and in some cases they’re even in a flood plane which means you’re putting yourself at risk.
If the inclement weather that Brisbane is known for, the flooding that does happen in Brisbane, if it comes again and you buy an older property in a lower lieing area, you are at risk and then number three, and this was really the cause for why I’m producing this video is, because I spoke to a prospective client a couple of days ago.
He said, “Niro, look I’m living in Melbourne but I can see right now that with all the research out there, yes, the Brisbane market is going to grow in value.” And he said I guess I want to do my research but in the end it doesn’t matter because wherever I buy in Brisbane it’s going to go up in value”.
And that really caused me some concern because yes in Sydney in Melbourne that’s happened.
But here’s what I can tell you right now.
There are some people who buy in the Brisbane market who will not do their research, who will buy in the wrong area and those areas will either not rise in value or the rise will be pretty minimal, if at all.
Because the Brisbane market is completely different to Sydney and Melbourne right?
There’s a lot of infrastructure for example not in the CBD but on the fringe areas. People in Brisbane for example don’t necessarily use the train line. They prefer to drive. The Queensland train system is actually very heavily under utilised in many areas right?
So there are a number of differences.
So yes I believe the Brisbane market will be the strongest performing market for capital growth. The rental yields there are far superior than anything you can get in Sydney and Melbourne.
But please be cautious. Please do your research.
Make sure you’re buying in the right areas and you’re not just buying on a whim. You’re getting the right guidance because that’s what you’re going to need because if you do that, I strongly believe that yes there are some really good prospects for capital growth in the right areas of the Brisbane market.
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June 3, 2020
May 20, 2020