South East Queensland may be the next property hotspot

Why investing in South East Queensland could set you up for success?

4/05/18

As the Sydney and Melbourne property markets begin to slow, real estate in South East Queensland looks poised for growth. In fact, many experts are tipping the region to become Australia’s next property hotspot.

We explore why this is, what’s counting in South East Queensland’s favour and which areas have already started to take off.

Why South-East Queensland?

South-East Queensland stretches from the NSW border and the Gold Coast north to Noosa Heads and the Sunshine Coast. It also goes inland as far as Toowoomba.

This stretch of land takes in the State’s three most populous cities and is home to 3.5 million out of 4.8 million Queenslanders, according to the Australian Bureau of Statistics. It is also home to some of the country’s most famous beaches and best weather.

How has the South East Queensland property market been performing?

 Over the past 10 or so years, property prices in South East Queensland have been reasonably flat – particularly in Brisbane. In fact, CoreLogic data shows that in the decade to 2017 the average property price in the city fell 11.4% when inflation was taken into account. At the same time as Sydney’s rose by 44.1%.

But this trend has finished and has even already started reversing.

In the year to 31 March 2018, Brisbane property experienced growth of 1.2% and provided a total return of 5.2%, while Sydney property fell by 2.1% and provided a total return of just 0.9%.

Many suburbs close to the city performed particularly well, with inner-city suburbs Teneriffe and Auchenflower registering gains of 41.3% and 30.3% respectively over 2017. Meanwhile, leafy Fig Tree Pocket (26.8%) and St Lucia (25.5%), also saw prices rise by more than a quarter in just 12 months.

Population growth key to price growth

This trend looks set to continue. Property is subject to the laws of supply and demand. So, the one thing that tends to affect property prices most dramatically is population growth. More people means more demand for housing and, unless development can keep pace, prices naturally rise.

Over the past few years, Queensland’s population has grown only steadily, rising by only 0.8% in 2016, according to Population Australia. But over the coming years, that is also expected to change, with official projections showing that the State’s population will rise to anywhere between 6.23 and 7.21 million by 2036.

Much of this growth should come from interstate migrants leaving Melbourne and Sydney. And it could well happen soon. The last time there was a gap this large between the average property price in Sydney and Brisbane was in 2002 when Brisbane homes were valued at 43% of Sydney’s. That year, no less than 40,000 people migrated to the Sunshine State and many predict the same pattern will replay itself this time around.

This growth should disproportionately affect parts of South-East Queensland, with some predicting the Gold Coast’s population will more than double to 1.2 million by 2050. At the same time, while there has been a raft of new apartments that have hit the Brisbane market recently, building approvals for residential dwellings are now low.

That means population growth has the potential to more than account for any residual access supply in the Brisbane apartment market and put pressure on property prices generally.

Queensland’s reinvigorated economy

Interestingly, many of the expected arrivals who will inflate Queensland’s population further are likely be younger professionals and young families, not the stereotypical demographic of retirees or seachangers. The main reason for this is because Queensland should increasingly be an area of jobs growth.

Since the GFC, the State’s economy has been the largest brake on both population and property price growth. A high Australian dollar, falling commodity prices disproportionately affected Queensland’s key industries such as mining, education and tourism. But these sectors are coming back to life, especially on the back of increased trade with China, according to Deloitte Access Economics.

In fact, Deloitte predicts Queensland’s economy will grow by a healthy 3.1% a year until 2021, compared to a national average of 2.7%.

Government planning and infrastructure to play its part

The Queensland government is playing its part too. Its official report, ShapingSEQ, informs local planning across the region’s 12 local government areas and guides future infrastructure planning and investment.

The government is particularly aiming for growth towards in the western section of the region, with areas such as Toowoomba, Springfield and Beaudesert earmarked for big things.

On top of this, the government has commenced construction on some serious infrastructure projects, many of which are due to be completed by 2021, including:

  • A $10.94 billion in transport investment, which includes a second runway as part of Brisbane airport’s $2 billion and the $5 billion Cross River Rail initiative due for 2014 completion, plus a Brisbane metro light rail project.
  • $734 million arts/culture and recreation upgrade
  • $2 billion ‘Brisbane Live’ Entertainment Arena Precinct
  • $2.03 billion energy upgrade
  • $5.37 billion investment in health and the medical industry
  • $504 million into education and training
  • $267 million in water projects.

How to access the best opportunities in the South-East Queensland property market

If you’re interested in accessing the very best opportunities in the South-East Queensland property market, Vystal can help. Our 360 Investment Model looks at a range of factors including social and economic vibrancy, infrastructure, employment and occupier profiles, and proximity to amenities.

After all, it is these factors that lead to long-term price growth and should mean that a property becomes a sound investment.