UNAFFORDABLE prices interstate will keep driving more property investors north.
But analysts are split over whether history will repeat itself with a massive surge in Brisbane’s median price.
The Brisbane median house price jumped 5.3 per cent in the year to June to $475,000, according to CoreLogic data.
Residential property investment firm Meridian Australia director Glenn Piper said if the market behaved as it did in the past, Brisbane’s median price could be heading towards $800,000.
He said in the past Brisbane worked counter cyclical to Sydney – going into growth when the New South Wales capital stagnated.
Brisbane went from 46 per cent of Sydney’s value in 2001 ($165,000 compared to $364,000) to 78 per cent in 2008, then back down to 49.4 per cent last year, he said.
“If this is a case of history repeating itself and Brisbane’s values rise again to be 78 per cent of Sydney’s values, Brisbane’s median house price would rise to $813,000 – almost $300,000 higher than its 2015 median house value.”
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BUILDING A DREAM ON THE BACK OF BRISBANE
SYDNEY couple Mathew and Danielle Potts, who bought their first house there nine years ago, have bought five Brisbane properties during the past two years off profits made on their three NSW properties.
The pair ultimately hope to be able to afford to buy a home where they now rent in Sydney’s Coogee.
“Our dream is to buy our own home in the city (Sydney),” Mrs Potts said. “We love living here, obviously, and we would love to buy here eventually. We’re hoping the investments will make that possible.”
She said when the Sydney market was reaching its peak, they were advised to consider Brisbane.
“We sold at the peak. It’s quite nerve-racking buying in another city, but hopefully it pays off. Once we saw what happened in Sydney with our investment properties, it gave us the confidence to consider elsewhere. I feel it’s now a lot easier to do it again.
“I’m expecting a fairly good return in Brisbane. We’ll just wait it out, we’ve got renters in our properties, and the rent is covering the mortgages. We’ve noticed growth already so that’s positive.”
But Matusik Property Insights director Michael Matusik said despite continued calls of a boom in southeast Queensland, its annual growth rate remained about half of that experienced in Sydney and Melbourne.
“It’s true that much of southeast Queensland is between 6 and 12 on the property clock. So things should continue improving,” he said.
“It is also true that southeast Queensland typically follows the Sydney/Melbourne cycle and receives buyer interest from down south due to price and rental yield differentials. But is it realistic to label southeast Queensland Australia’s next ‘boom’ area?”
He said several factors were needed for a boom to occur, including population growth, jobs growth, tight housing supply, hordes of upgraders, and housing prices that were “a steal”.
The Potts hope their Brisbane gamble will pay off with a home in Sydney’s Coogee.“Whilst southeast Queensland values are less than Sydney’s and Melbourne’s, housing isn’t cheap in southeast Queensland when measured against local metrics – housing costs are far from a steal.”
Mr Matusik said previous southeast Queensland booms were helped by households trying to “outdo the Joneses next door”.
“This was pre-GFC. Post that event, quite a few older southeast Queensland households are still licking their financial wounds; most remain cautious and are reluctant to start a house price bidding war.”
He said Queensland had lost its “x factor” of high-paying resource jobs, whereas that still existed south of the border via overseas buying.
He expected southeast Queensland to go from recovery mode to upturn over the coming 12 to 24 months, but his prediction was a rise in values of 5 per cent to 10 per cent.
“Our outlook,” he said, “might actually be somewhat optimistic after all.”
Original article published at www.couriermail.com.au by Sophie Foster, The Courier-Mail 3/7/2016