While many markets suffered from the economic impact of COVID-19, Brisbane’s property values remained resilient last year, and now almost all property analysts are suggesting that Brisbane’s housing markets will perform strongly in 2021.
On today’s show, I chat with Brett Warren, national director of Metropole Property Strategist based in Brisbane to understand what’s really going on and why this time is different.
In fact, digging deeper into the statistics of property growth over the last few years, some properties have far outperformed others and freestanding Brisbane houses with 5-7 km of the CBD or in good school catchment zones have grown in value strongly.
Brisbane has really been a two-tier market and I know that many of the properties purchased for clients of Metropole’s Brisbane office showed double-digit capital growth over the property last 12 months.
While Melbourne and Sydney are highly regarded as Australia’s two world-class capital cities, Brisbane is what many class as a “New World City”, and on today’s podcast we will explain what that means and why those investors who take advantage of the changing trends in Brisbane will benefit significantly over the next few years, so welcome to today show
Some of the things we discussed
Metropole has had an office in Brisbane for almost 2 decades and in that time I’ve seen the city morph into a new world city.
Australia is very different from other countries with regards to the way we live. 86% of our 25 million population live in urban areas and 50% of these Australians live in either Sydney, Melbourne, or Brisbane.
While overall, the Brisbane property market has underperformed Melbourne and Sydney over the last decade there are different segments of the market that performed very strongly and we dig into this as we have a chat.
Australia has two global cities – Sydney and Melbourne – they are recognized around the world – Sydney for the Opera House, Melbourne for sport and art. Now Brisbane is being recognized as a “New World City.”
Brisbane punches above its weight – It’s only the 172nd biggest city in the world, but it’s the 80th most globally connected.
It’s in the top 30 percent of the world’s fastest-growing cities, it’s got world-class direct foreign investment, a competitive labour market, a highly lifestyle model and it’s an international student city.
A New World City must also have some “globally oriented” business clusters.
In Brisbane’s case, it’s higher education, it’s the digital economy and it’s commodities and professional services of various kinds but it’s also travel and tourism and conventions.”
Brisbane has been building its infrastructure and economy and is now attracting population growth.
Also, Brisbane has less traffic congestion than Australia’s 2 big global cities.
What is the Brisbane property market?
Let’s be clear what we’re talking about – many outsiders see Brisbane as stretching from the Sunshine Coast in the north to the New South Wales border in the south, 200 km long.
In one sense they are right because the Gold Coast and Sunshine Coast are now closely interconnected with Brisbane and workers will commute from these locations on their jobs in Brisbane.
In fact, that’s one of the reasons why property values have not grown as strongly over the last few decades – because SE Queensland has had abundant supply of properties, however, we’re not recommending investing just anywhere in this large parcel of real estate.
We only focus on properties in prime locations within 5 to 7 km of the Brisbane CBD.
Brisbane has underperformed
Brisbane’s capital growth has been from the top down.
There has been strong capital growth in the sought after, more affluent, more established inner suburbs within 5 to 7 km of Brisbane, but there has been minimal capital growth in many of the outer suburbs where there is less affluence and plenty of supply, and in fact abundant new supply.
For example, there are a number of commentators out there suggesting one should be investing in the Logan district or Ipswich, and while there has been substantial physical growth there – lots of new estates – there has been minimal if any capital growth.
Brisbane’s demographics are changing
For a number of decades, Brisbane suffered a “brain drain” where skilled, educated young people finished university and moved to Sydney or Melbourne where the more highly paid knowledge jobs were.
This is no longer the case, and a lot of millennials now are keen to stay in Brisbane as it is now a fun place to live.
So, the big shift is that people no longer want to leave Brisbane, they want to come to Brisbane. This was clearly seen through the challenges Australia experienced in 2020.
Millennials will shape the Brisbane housing markets.
Demographics will always drive our property markets and because of their sheer size and stage in the life cycle, no generation will shape Australia more during the 2020s than millennials.
They are now at the stage of their life where the earnings are increasing, and they will spend these on houses and lifestyle and their growing family.
However, this will create a challenge for all those high-rise tower block apartment blocks that were built over the last decade or so as millennials leave their centrally located one or two-bedroom apartments and migrate to the suburbs.
As millennials move into the suburbs, who will move into the inner-city apartments left behind?
The problem is that the Zs, who should take their place is a much smaller generation than the millennials and, with lower migration intake because of the coronavirus during the next few years, inner-city properties will stagnate or fall in value.
Brisbane has multiple pillars sustaining its economy
- Agriculture – the food bowl of the world
- Mining – some very big mineral deposits
As a New World City, Brisbane has a lot to offer and it’s comparatively cheap to move there and live there. That’s why it’s attracting people.
Some things we need to understand about the Brisbane property market:
- One City Council
One of the major benefits of investing in Brisbane is the fact that you are bound by only one city council. This has been efficient and proactive.
The price gap between our biggest capitals and Brisbane are now at an all-time high. This includes quality properties in quality locations.
People are getting excited about all of the new changes that are happening in the area.
- Proximity to Asia
This doesn’t necessarily mean China. It’s important to understand that there is more to Asia than China. International students and other positives come from these relationships.
There’s huge demand and not enough supply for the good A-grade properties.
Links and Resources:
Some of our favourite quotes from the show:
“I believe Brisbane’s what we call a new world city.” – Michael Yardney
“We know that COVID hit Australians differently. Not just health-wise, where some age groups, some demographics suffered more than others. Similarly, some demographics suffered more financially, economically than others.” – Michael Yardney
“It’s the investors who create the booms and busts when they get exuberant during the booms and get a bit down when difficult times occur.” – Michael Yardney
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