Buyers Agent Brisbane - Buyers Advocate for Real Estate Property Investment

Buyers Agent Brisbane

Buying Investment Property in Brisbane

Some of the statements you may have heard in reference to Brisbane:
- Emerging as Australia’s most preferred destination for internal migration
- Tapped to be Australia’s best performing property market
- Brisbane property is well positioned for growth

This was all before COVID. Before the banks reported an expected 4-30% decline in property prices by September 2020, before the national and international borders were closed, before businesses / industries were shut down, before all Australian’s went into social distancing, before lock-down was even a thing.

Before we get into property investing, let’s first understand where and what areas constitute Brisbane.

It’s important that when you are talking about Brisbane, you understand what part of Brisbane you are referring to. Brisbane can be classified in a number of different ways. To keep things clear, we will break down Brisbane into the following two areas:

1. Brisbane City

The CBD of Brisbane with a population of 9,460 people with a median age of 29, as of June 2016 ABS Census. It is located in the northern bank of the Brisbane River and occupies an area up to 2km2.

The big ‘watch-out for’ factor if buying property in the CBD is the oversupply of units.

2. Greater Brisbane

Greater Brisbane (which can also be referred to as Brisbane City, just so you are aware classifications need classification!) is 15,842 square kilometres of land.

Brisbane, the largest local government in Australia with 26 wards and 27 councillor positions, resides within the south-east corner of Queensland and is made up of five urban centres (which consists of 450 suburbs):

1. Brisbane City, which as indicated above is the CBD area.

2. Ipswich

Located west of Brisbane. The former capital city of Queensland, has its own CBD and the population is expected to triple in the next 25 years. Home to the royal Australian Air Forces Base. We are seeing large development companies (e.g. Stockland) invest in Ipswich. It also has very good road connections (M7 & M5) and two railway lines. It’s affordable land prices make this area very appealing.
3. Logan City

Lies between South Brisbane and the Gold Coast. It is the third largest council area in population. Logan offers affordable plus plus plus. Some of the infrastructure projects include highway upgrades and a $460million hospital upgrade. From Logan you can access Brisbane CBD, Gold Coast and Ipswich.
4. Moreton Bay

Is Inner north-west between Brisbane and Sunshine Coast. The Moreton Bay Rail Link provides direct access to Brisbane. There are a lot of opportunities in North Brisbane. It also has great access to Brisbane CBD and good infrastructure in respect to airports, universities and the shipping port.
5. Redland City

30kms east of Brisbane CBD. Redland City can be accessed by the Cleveland railway line and various ferries and water taxis. Here you will find your more affluent suburbs with median house prices close to if not exceeding the $1million mark - however not withstanding the opportunity to buy $400K properties in some areas.

Let’s go deeper into Greater Brisbane

For the purpose of this deep dive, we will focus on Greater Brisbane. This will provide you a thorough overview of activity and trends, broadening your scope, before you narrow down your property search to specific locations.

In this analysis of Brisbane we will cover property fundamentals - factors which determine the future performance of property values and the property rental market.

1. DEMOGRAPHICS

By 2050 Brisbane is expected to double its population, according to The Australia Institute.

Greater Brisbane is home to 2,270,800 people (2016 ABS Census), with a median age of 35 and average household size of 2.7 people. The population as of 2019, indicated by Macro Trends, is expected to be at 2,406,000 based on average growth rates. (The next Australian Census is planned for August 2021 will provide an accurate number).

From 1996 to 2016, Greater Brisbane population has grown by 694,000 persons. This is an average of 1.5% year on year growth rate. From 1997 to 2001, Brisbane had below 1% growth rates followed by becoming the fastest growing capital city between June 2001 and June 2006 - recording an average annual growth rate of 2.2%. (ABS).

In 2001 Brisbane shifted to higher density types of houses which impacted favourably on population growth, and also positively impacted employment, infrastructure planning and local business (Australian Government Research Report 134 - Population growth, jobs growth and commuting flows in South East Queensland).

Since 2006 Brisbane has experienced more steady population growth. Steady growth provides good economic fundamentals that lead to job creation and lower unemployment. Something to be aware of when you are buying property investment - Is economic growth steady or does it fluctuate and if so what are the drivers of fluctuation?

The saying, be careful of buying into a ‘one trick pony town’ is very important when property investing. You can go from hero to zero very quickly if for example you own a property on a resort and the likes of COVID sweeps through. A common position held by regional towns that are only reliant on one or two industries (e.g. mining, farming or tourism). If one of these industries has has a down turn or moves out of the area, can greatly impact the area and may never recover. >

Who is living in Brisbane?

The average age of a person living in Brisbane is 35 years old. Their major incomings and outgoings are:

Median weekly household income = $1,562
Median weekly mortgage repayments = $429. It should be noted that this data comes from 2016 Census. Since then we have seen significant declines in interest rates. So this is expected to be lower.
Median weekly rent = $355

2. SUPPLY & DEMAND

Approxiately 92% of private dwellings in Brisbane is being occupied (ABS 2016). This is broken down into the following housing types:

- 76.4% Separate House
- 10% Semi-detached
- 12.6% Flat or apartment

Of occupied private dwellings, 26.4% were owned outright, 35.7% were owned with a mortgage and 34.5% were rented.

It’s worth mentioning that tenants in houses typically stay longer than tenants in units. Something to keep in mind when you are determining what type of property to invest in and the length of time you would like to hold the property.

Brisbane over indexes on the 2 person household in comparison to other capital cities in Australia, as indicated in the graph below. The number of households in Greater Brisbane increased by 56,941 between 2011 and 2016. That’s an average of 9,490 new households each year.

Since 2006 Brisbane has experienced more steady population growth. Steady growth provides good economic fundamentals that lead to job creation and lower unemployment. Something to be aware of when you are buying property investment - Is economic growth steady or does it fluctuate and if so what are the drivers of fluctuation?

The saying, be careful of buying into a ‘one trick pony town’ is very important when property investing. You can go from hero to zero very quickly if for example you own a property on a resort and the likes of COVID sweeps through.

How will Household sizes change over the next 10 years?

According to the ABS statistics:
- Family households are expected to see the largest increase, with a project average growth rate of 1.8% per annum
- Lone person households will have the highest growth rate leading into 202, an average of 2.4% increase per annum.
- Group households will see the smallest growth rate at an average of 1.4% per year.

Over supplied markets

When buying investment property, words like oversupply get thrown around - and for good reason. In Brisbane, in 2016, we saw units going up at double the rate they had previously. ABS completion data suggesting 21,342 units were completed, against 11,585 per year (historic average).

Corelogic reported “future housing demand is also estimated based on the Queensland government ‘median’ scenario of population projections, suggesting about 8,000 dwellings are required to house the growing population each quarter to June 2021” - as depicted in the graph below.

Irrespective of the accuracy of this data, the point is understanding supply and demand. What the key factors that drive both, in a specific area. In Brisbane if ‘one person households’ continue to grow, this impacts supply, but what property type? There are many variables which affect this - in the current ‘COVID Climate’ the rental market in lower socio-economic areas are holding stronger than affluent areas.

The continual reduction in cash rate / interest rates reduces the cost of servicing debt which appeals to property buyers. How does this influence market supply and demand in respect to property values? It may mean we won’t see significant falls in property market values or it may be limited to some areas and not others.

These are all compelling factors of why you should work with a team when investing in property. Living and breathing the market helps you understand it. We have Mark our Buyers Agent in Brisbane who is on the ground every day looking at properties. He lives in Brisbane. He also lives the market. Mark has been buying properties in Brisbane for 15 years.

3. AFFORDABILITY

This is one of the big advantages Brisbane has on it’s side. Some people equate Brisbane to the Sydney market 20 years ago. When you could still buy a house under $1million.

According to the domain.com.au forecasts below Brisbane houses are tipped to have the highest growth from 2020-2021. Please be mindful that this forecast was generated in December 2019 - prior to COVID.

The question is whether the trend will still play out. It might be delayed until we get through COVID. We definitely know that the market will be impacted by COVID. How much by and for how long, is yet to be determined, as the factors that influence property pricing this time round is very different to any other time, e.g. getting a vaccination - which then influences consumer sentiment and business growth, and hence the speed of market recovery.

The affordability of the Brisbane market has also impacted migration from other Australian cities. Brisbane has the highest ‘internal migration’ than any other capital city. With 12,000 people migrating to Australian in 2016-17. Coming ahead of the second largest internal migration city, Melbourne, at 9,200 people.

Where are they coming from? The graph below shows people in the rest of QLD, Sydney and NSW are the biggest movers into Brisbane. In our research we also discovered that between 2006-2016, Brisbane was more attractive to a younger demographic (15-24 year olds).

Our changing work cultures, i.e. the technology available that makes working from home a lot more streamlined, could see this growth rate further increase in the next 5 years.

Another major factor is interest rates. The interest rate of 0.25% is expected to be maintained if not further reduced. The RBA expects the unemployment rate to reach 10% and then settle at 7% by the end of December 2020. The RBA stated that “The interest rates won’t increase until progress is being made towards full employment.”

With low interest rates, near next to 0%, potentially going into negative, keeping the money in the bank is not a winning strategy. You could be potentially receiving 5% yields on a property investment whilst paying your low interest rate mortgage. With interest rate levels like this, if you have job security, it can be both in the short term and the longterm a lot more fruitful to invest your money in property.

See below interest rate trends from 1959 to 2019. We have seen interest rates coming down since 2011 in Australia.

4. AVAILABLE FINANCE

A lower priced market, e.g. Brisbane versus Sydney, a market that is expected to grow becomes not only appealing from a personal affordability perspective but also from a borrowing capacity. The probability of acquiring finance for a house in Brisbane is easier to access.

The caveat is the effects of COVID, of which has forced the banks to review their lending criteria. One area that will most definitely be addressed is assumed level of risk of various property types. As we all know commercial investment has been hit hard. If you own commercial property in hospitality, tourism and retail, and don’t have a secure tenant this presents a larger risk than what it would pre-COVID. Also on the other side, if you work in these industries and cannot prove your income has been impacted or will be, then it will be very difficult for you to access finance.

If we drill further down, the percentage of finance available, relative to the property price and the rental market (i.e. whether renters are pulling out) may also vary. The criteria is expected to continue to change and adapt to what areas and industries are being hit harder, in an economic sense.

If you put on the table the following two options to a lender:

1. An outer Sydney apartment for $440k, with a rental of $300 per week.
2. A block of land with a house 30kms from Brisbane, with a rental between $400-$450 per week.

Which option do you think you will have a better chance of acquiring finance for?

5. LOCAL ECONOMIC TRENDS

The employment industries and jobs available are becoming more diversified in Brisbane. Educational precincts (tafe, universities, colleges, schools) contribute, along with the Brisbane Council’s proven commitment to infrastructure development (roads, transport, etc) has opened up the city in an entirely new way.

Consequently it is becoming a reputable city comparable to the likes of Sydney and Melbourne. Employment is a big driver for growth. If anything the main driver. As Brisbane continues to invest in creating diversified industry, the steady growth will continue.

The main industries people work in

12.5% Health care and social assistance
10.1% Retail trade
9.2% Manufacturing
8.5% Professional scientific and technical services
8.2% Construction
8.1% Education and training
7.5% Public administration and safety
6.0% Accommodation and food services
5.7% Transport, postal and warehousing

*2016 ABS data
The main occupations

22.7% Professionals
16.3% Clerical & administrative workers
13.4% Technicians & trades workers
11.5% Managers
9.6% Community & personal service workers
9.5% Sales workers
9.0% Labourers
6.2% Machinery operators & drivers
1.8% Occupation inadequately described/ Not stated.

*2016 ABS data
Large scale projects in Brisbane that will provide future employment opportunities include: Queens Wharf, HS Wharf, Trade Coast, Cross River Rail, Second Airport Runway, Adani Goal Mine, Logan Hospital upgrade, Planned residential expansion for West Caboolture and Brisbane Metro,
Through the Brisbane council you can access infrastructure plans. The council in their 2016-2026 plan stated that “the Local Government Infrastructure Plan represents around 1000 future projects worth $2 billion for stormwater infrastructure, transport, parks and land for community facilities until 2026.”

Consumer Sentiment / confidence influences housing values and growth rates. If confidence is down, people are a lot less likely to sell. Even if you had the buyers lined up the supply isn’t there. The stagnation in the property market has a domino effect on building and construction, local business, etc.. and consequently can impact unemployment numbers.
School catchments are a big driver of demand
School Catchments refer to the proximity of where you live to the State School school your children will be accepted in. If you are in the catchment you have preference over those who live further away. It’s actually more than preference. If you live outside the ‘designation area’ then your chances are limited. This is applicable to both primary and secondary state schools. It’s good information to know when it comes to property value. Children spend 13 years in the schooling system. It also influences the rental market.

In Brisbane the State Schools are competitive in some areas to get into. The Brisbane Government provides a very useful tool (https://www.qgso.qld.gov.au/maps/edmap/) to determine the catchments based on school year and/or area.
The Weather a Contributing Factor
The Bureau of Meteorology reported 2019 as “Dry year overall in Greater Brisbane, with some locations reporting their driest year on record. Days were record warm at several locations, including Brisbane city. Mean minimum temperatures were close to, or slightly above average.”

The temperature means for Brisbane in 2019 were:
- The mean daily minimum temperature was 17.1°C
- The mean daily maximum temperature was 27.8°C
- The warmest day was 41.2 °C on 16 December
- The coolest day was on 4 June when the temperature reached 17.2°C

The weather history of Brisbane below shows an increase in the maximum temperature of between 25-26°C being reached in the last 20 years.

Don’t discount the impact weather plays on property values. Warmer climates are a draw card, particularly for older generations.

In regards to flooding, Brisbane in 2011 experienced severe flooding. The properties that have a higher risk of flooding are properties on low lying areas, residing around the edges of The Brisbane River. The Brisbane City Council has Flood Awareness Maps available - providing historic flood information. As Buyers Agents / Buyers Advocates it's crucial for us to know this information and make it readily available for property investment buyers.

Brisbane, the Happy City
A study conducted in September 2019 revealed people living in Brisbane enjoy a quality life rating of 93%. Apparently the happiest in the country. (We should preface by saying this survey was conducted by the Brisbane City Council). The factors that contributed to this result, according to the survey findings were: A better standard of living, a better quality of life, a better place to raise a family and 75% said they are happy with the cost of living.

Vox Pox style interview by QUT News in support of this result reported one resident saying what they enjoyed about Brisbane is the ‘smaller community city’, compared with other capital cities.

Brisbane has also ranked 18th, in The Economist’s 2019 Global Liveability Index - The World's most liveable cities. Brisbane joins Melbourne (#2) Sydney (#3), Adelaide (#10) Perth (#14) - indicating the comparability in what Brisbane has to offer. The categories that are assessed in this index include: stability, healthcare, culture and environment, education and infrastructure.

In a 2018 article, The Brisbane Times quotes the Lord Mayor describing why Brisbane has a lot on offer

“From affordable housing, quick and safe commutes and world-class lifestyle and leisure. Brisbane is a great place to live, work and relax. It’s a liveable city with great weather, vibrant green spaces, lively bars and restaurants, world-class galleries and premier events. Our city's universities are regularly ranked amongst the best in the world and are increasingly attracting young people looking for a quality education without the high living costs faced by our southern counterparts."

Our top 10 reasons why we as Buyers Agents, like Brisbane for property investing

1. Affordability. 60-70% lower than comparable property prices in Sydney. Also average income is only 10% higher in Sydney than Brisbane.
2. The weather is a big draw card for a lot of people.
3. Approved Infrastructure investment is higher in Queensland than Victoria.
4. Expected property value growth in next 5 years of 30%.
5. The Opportunity is real cashflow properties - which are not available anyway in Sydney / Western Sydney Newcastle, Wollongong, Central Coast.
6. Brisbane is attracting a younger demographic.
7. Lower value properties are not as impacted in times of recession. During the Sydney property boom between 2012 to 2017 lower valuable properties in Western Sydney experienced higher growth rates. It helps that Governments support lower socio-demographics during tough times and people typically reduce their expenses. The biggest expense we have is weekly rent - moving from inner city Brisbane further out is a big saver and does not distribute access to jobs.
8. Brisbane provides a city life on an affordable budget.
9. It has become the most preferred destination for international migration.
10. It’s one hour from Sydney.

Your Buyers Agent

If you are interested in buying a property investing we are here to help. If you are interested in buying property in Brisbane, this is one of our specialties. We not only own collectively in our team over 40 Brisbane properties, but we have and continue to buy Brisbane property for our clients, because we see the potential.

The cash flow yields in the short term and equity growth in the long term. Brisbane is still the most affordable city… and whilst it remains that way, we highly encourage investors to capitalise on this opportunity that won’t be around in years to come.

As part of our buyers agent / buyers advocate service working with you through a strategy that takes into consideration your current situation and future aspirations is the first thing that needs to be addressed before we secure a specific property. This strategy will drive the ideal property investment for you.

The money is always made in the buying.

Getting this right is crucial to how the asset will support your future needs. Working with a property buyers agent / buyers advocate will give you an expansive view before narrowing your property search down into a market and property type.

Contact us


for Expert Property Investment Advice


Telephone

1300 022 482


E-mail

hello@searchpartyproperty.com.au

Appendices

Greater Brisbane area - https://brisbanetour.com.au/blog/what-is-the-greater-brisbane-area/
Brisbane Demographcis - http://www.population.net.au/brisbane-population/
Brisbane double it’s population - https://www.tai.org.au/sites/default/files/Population%20Paper%20FINAL.pdf
Brisbane population trends - https://www.macrotrends.net/cities/206170/brisbane/population
Brisbane fastest growing city 2001 - 2006 - https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/3218.0Main%20Features31996%20to%202006?opendocument&tabname=Summary&prodno=3218.0&issue=1996%20to%202006&num=&view=
Brisbane shift to high density housing between 2001 - 2006 - https://www.bitre.gov.au/sites/default/files/report_134.pdf
The economist 2019 Global Liveability Index - https://www.eiu.com/topic/liveability
Household size - https://profile.id.com.au/australia/household-size?WebID=270
Brisbane Council size - https://www.brisbane.qld.gov.au/about-council
Internal Migration - https://www.abs.gov.au/AUSSTATS/abs@.nsf/Previousproducts/3412.0Main%20Features92016-17?opendocument&tabname=Summary&prodno=3412.0&issue=2016-17&num=&view=
House price forecasts - https://www.domain.com.au/news/brisbane-house-prices-to-rise-by-up-to-17-per-cent-by-2021-928470/
RBA interest rates - https://tradingeconomics.com/australia/interest-rate
Homeloan interest rate history - https://www.infochoice.com.au/rate-watch/history-of-interest-rate-movements/
Lending criteria review - https://www.domain.com.au/money-markets/coronavirus-prompts-sudden-lending-changes-for-hopeful-home-loan-borrowers-946784/
Brisbane Weather - http://www.bom.gov.au/climate/current/annual/qld/brisbane.shtml
Where Brisbane residents are coming from - https://www.brisbanetimes.com.au/brisbane-news/why-more-people-are-leaving-brisbane-for-other-australian-cities-20180528-p4zi0n.html
Brisbane City Council - Flood information - https://www.brisbane.qld.gov.au/community-and-safety/community-safety/disasters-and-emergencies/be-prepared/flooding-in-brisbane/flood-awareness-map
Logan City - https://profile.id.com.au/logan/about
Brisbane city council Local government infrastructure plan - https://www.brisbane.qld.gov.au/sites/default/files/20180627-infrastructure-plans-factsheet.pdf
Images sourced from unsplash.com