PROPERTY investors on the lookout for bargains are eyeing the sunshine state, with a national buyer’s agency reporting a boom in Queensland inquiries, especially those from interstate residents who can’t afford to buy in their own cities.
Cohen Handler buyer’s agent Jordan Navybox says there are big profits to be made in Brisbane, especially in established suburbs close to the CBD.
“You throw a dart at Brisbane in the next three years and you’ll make money,” he claimed.
But other commentators warn to proceed with caution, as the state’s rebound after floods, economic turmoil and the mining downturn is far from guaranteed.
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Mr Navybox, who heads up Cohen Handler’s Queensland operations, told that investor inquiries were up 40 per cent nationally over the past twelve months, and “of that, 41 per cent is for Queensland”.
“Buyers looking for an option outside Sydney and Melbourne, purely because of how unaffordable it has become,” he said.
Brisbane has a median property price of $504,390, compared with Sydney’s $935,250 and Melbourne’s $755,510.
Mr Navybox said Queensland had “had a bad rap” but that “recovery is underway” and that the city was yet to be restored to its rightful place in Australia’s property market.
“Brisbane is the third largest capital city but it’s sixth in median price,” Mr Navybox said.
“It’s an anomaly that will be corrected … Its logical spot sits under Melbourne and above Perth.”
He recommended investing in established properties in high-demand suburbs such as New Farm, Paddington and Hamilton, where two bedroom units.
“We’re steering clear of infill developments on the outskirts of town,” he said.
“You can get a house only 10km away for $500,000; however, we’d prefer to buy a good unit over a poor house.”
He claimed that searching for bargains within suburbs where new developments were limited could deliver capital gains of 30 to 50 per cent within three years.
Lounge balcony
New Farm is one of Cohen Handler’s hot picks for Brisbane investment properties. Just a few streets back from this luxury waterfront apartment block, you can pick up an affordable unit for $400,000.Source:Supplied
But not everyone is as optimistic about Queensland’s prospects.
Property analyst Louis Christopher of SQM Research said the state’s comparatively sluggish economy meant “buying activity hasn’t been strong”.
“If Brisbane is so good, why aren’t we seeing capital gains now?” he challenged.
“Yes, we are bullishly positive on the southeast Queensland market, and it’s a lot more affordable than Sydney — but there are reasons for that,” Mr Christopher said.
He said that the Queensland economy was still suffering from the austerity of the former Liberal Government, along with the mining downturn.
But there were hopes the new Labor Government would “open up its purse strings” and kickstart a recovery.
“There’s still a lot of stock about, and the economy is still quite patchy,” Mr Christopher said.
“Nevertheless, we are a little bit more positive on the market. We do agree it’s more affordable, on a rental basis and on an absolute price-to-wages basis.”
He said the Gold Coast was likely to see capital gains of between seven and 11 per cent over the next 12 months, but that Brisbane would be more restrained.
The Gold Coast property market is warming up.Source:Supplied
“We note that over the last twelve months, Brisbane has not performed that well. And there are no indicators that Brisbane is about to boom,” Mr Christopher said.
“However, on the Gold Coast — and, to a lesser extent, the Sunshine Coast — buying activity has picked up.”
Mr Christopher has advisd buyers to proceed with caution and do their research.
He expected prices would continue to rise in Sydney and Melbourne.
One area of agreement is that Brisbane offers good rental returns, with the city currently a landlord’s market.
But this might not last for long, with a BIS Shrapnel housing forecast predicting that rents will be forced down by the slew of new apartment developments underway.
The Residential Property Prospects 2015 to 2018 predicted a 13 per cent rise in Brisbane’s median house price over the three years to 2018, and a six per cent rise in the median unit price — substantially lower than Mr Navybox’s ambitious 30-to-50 per cent goal.
“Because the market has been so weak, it’s not suffering the affordability issues of Sydney and Melbourne,” the study’s author Angie Zigomanis told Fairfax Media.
“We don’t expect the economy to be weak forever, it should eventually start improving and we expect to see migration improving and prices increasing.”
“It will be more of a seller’s market … but we won’t see a Sydney style boom,” he said.