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Brisbane’s property market forecast for strong growth in 2021-22

Brisbane’s property market

Are you wondering what will happen to the Brisbane property market moving forward?

Well… based on how the market has been performing so far it’s likely that will see high double-digit Brisbane house price growth in 2021, with most segments exhibiting strong price appreciation other than the inner city and high-rise apartment market.

And despite Covid related challenges buyers and sellers are still transacting and Brisbane property values:

  • increased 0.6% over the last week
  • increased 1.8% over the month of September, and
  • 19.4% over the last year

And there is still plenty of growth left, as Brisbane property is still very affordable compared to the other east coast capital cities.

What a turnaround from all the pessimistic forecasts all the banks made in the middle of last year.

Currently, the Sunshine State capital is shining but it’s not too late to be early in this cycle – there is plenty of growth ahead – for the right properties.

Brisbane’s property market

BRISBANE DWELLING PRICE TRENDS – Source: Corelogic October 2021 

Brisbane’s property market

Outstanding demand for lifestyle areas as well as extremely strong demand for detached houses in Brisbane, particularly in the inner and middle-ring suburbs has delivered 5.3% overall growth in the last 3 months, with Brisbane’s more expensive properties outperforming.

The resurgence of buyer interest in the Brisbane property market has meant that auction clearance rates have consistently been in the 70% range, which is unusual for Brisbane considering this city is not known for its auction culture like its southern cousins, but this is just another suggestion that there are more buyers than there are sellers and this always leads to higher property prices.

At Metropole’s Brisbane office we are noticing more investors are getting into the Brisbane market recognising that while there are no bargains to be found, in 12 months’ time the properties they purchased today will look like a bargain.

Not that long ago Westpac Bank updated its forecasts and tipped Brisbane prices to surge 20 percent between 2022 and 2023, meaning Brisbane is likely to be one of the best performing property markets over the next few years.

Of course, while some locations in Brisbane have strong growth potential, and the right properties in these locations will make great long-term investments, certain submarkets should be avoided like the plague.

Increased demand for Brisbane houses has been underpinned by increasing consumer sentiment, historically low interest rates, and internal migration considering the relative affordability of houses in Queensland compared to Sydney and Melbourne.

Similarly, popular areas of the Gold Coast and Sunshine Coast have enjoyed strong demand considering the increased flexibility of being able to work from home and commuting to the big smoke less frequently.

At the same time, property investor activity has been strong, particularly for houses, not only coming from locals but from interstate investors who see strong upside in Brisbane property prices as well as favourable rental returns.

But be careful…there is not one Queensland property market, nor one south-east Queensland property market, and different locations are performing differently and are likely to continue to do so.

Houses remain a firm favourite of prospective home hunters, with demand rising post-lockdown and it remains significantly elevated compared to last year.

However, apartment demand has been sliding and, in general, apartments in Queensland are a higher risk investment than houses, particularly due to a high supply of apartments that are unsuitable for families or owner-occupiers.

To help you make an informed investment decision, I’m going to examine what’s going on in the Sunshine State in detail in this article.

But be warned…it’s a little longer than normal, so if you’re looking for a particular element of the Brisbane property market, use these links to skip down the page.

There are multiple markets in the diverse sprawling city of Brisbane; divided by geographic location, price point, and property type.

And just to make things clear…I’m talking about the property market in Brisbane – not the Queensland property market.

That’s a very different animal!

If you’ve been following my property investment strategy, you’ll know I only invest in capital cities and that’s why I avoid the Sunshine Coast, the Gold Coast, and Queensland’s regional markets which have very different (and fewer) growth drivers than Brisbane and are therefore more volatile.

And not all Brisbane properties will perform well.

In Queensland, houses are the preferred style of accommodation over units, and investors who buy rental apartments in high supply areas are taking a high risk with both equity and cash flow risks materially increasing over buying the right house.

So how long will this cycle continue?

If you would have asked me this question a couple of weeks ago I would have suggested that our property market would continue growing at the rate of 6 to 7% per annum throughout 2022 until eventually, affordability slowed the market down.

Remember the current upturn phase of the property cycle only commenced a year ago, in October 2020.

Normally the upturn stage of the property cycle lasts a number of years and is followed by a shorter boom phase which is eventually cut short by the RBA raising interest rates or by APRA introducing macroprudential controls to dampen the exuberance of property investors and home buyers.

However, this time around we have experienced an unprecedented rate of growth seeing our property markets perform even more strongly than anyone ever expected, with the rates of house price growth at levels not seen for a number of decades.

While a lot has been said about the 20% increase in property values many locations have enjoyed so far this year, it must be remembered that the last peak for our property markets was in 2017, and in many locations housing prices remain stagnant over a subsequent couple of years and it was really only earlier this year that new highs were reached.

This means that average price growth was unexceptional over the long term, averaging out at around 4 percent per annum over the last 5 years

But recently there seems to have been a change of sentiment about our housing markets from our financial regulators, the banks, and even our treasurer.

The Council of Financial Regulators, the club of four main financial watchdogs, showed concern about the increased level of home lending in the first half of the year.

In particular, they signaled their concern about the number of mortgages taken out at more than six times the borrower’s income.

The council has asked APRA to put together a list of potential measures, but this is going to be a challenge and their response will need to be measured so as not to create unintended consequences such as a severe property downturn.

Just look back to 2014 when APRA checked house price growth by targeting investors and restricting the size of what they could borrow relative to the value of their housing collateral.

While tougher lending standards will certainly take some heat out of Australia’s property markets by restricting the number of people that can get home loans, or lessen the amount they can borrow, the move could backfire in the short term as investors and homebuyers try to rush and buy to beat the buzzer on the upcoming tightening of lending conditions.

Back to the question of when will this property cycle end – there is little doubt that Macro-Prudential controls will have a negative impact on our property markets and slow the rate of growth of housing values.

After all, that’s what they’re intended to do.

Whether the markets will just experience slower growth or stop dead in their tracks will depend on what measures are introduced.

Targeting debt-to-income ratios will have a limited impact on higher-wealth households, who often have multiple streams of income.

However, it will affect lower-income households and those purchasing property for the first time.

If you think about it, first homebuyers don’t have a “trade-in” of a previous home and therefore need to borrow higher loan-to-value ratios.

On the one hand, the government says it wants to encourage first homebuyers, and on the other hand, it is encouraging the regulators to sideline them.

So in the meantime, it’s just waiting and see what our regulators choose to do.

I hope they have learned from the results of previous interventions, otherwise, if history repeats itself, there will be some unintended consequences.

Watch this space.

However, in the meantime, there is likely to be a mini-boom as home buyers and investors bring forward their property purchases to beat the buzzer of more restrictive lending criteria.

So…is it the right time to get into the Brisbane property market?

Anyone who buys an A-grade home or investment-grade property in Brisbane now will look back in a couple of years’ time and recognise they bought a bargain, as this new property cycle still has some years to run.

There is a perfect storm of positive growth drivers that will have Brisbane house prices performing strongly in 2021 and 2022 and the recent announcement of Brisbane winning the 2032 Olympic games will underpin strong infrastructure growth, economic growth, and population growth over the next decade.

This suggests that South East Queensland will continue to be a preferred destination for many Aussies from interstate due to lifestyle, health, and affordability reasons.

But, as I have explained, there are multiple housing markets within Brisbane, based on price point, geography, and type of property and as always, you can’t just buy any property and count on the general Brisbane property market to do the heavy lifting over the next few years, so careful property selection will be critical.

Brisbane’s property market

Article Source: propertyupdate.com.au

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Brisbane

$130 million Wynnum CBD apartment development proposed

Wynnum CBD apartment development, Ora tower

The Brisbane-based property developer, HamBros, led by local developer Justin Ham, has lodged plans for a 27-level mixed-use development in the heart of Wynnum.

Ora, which will spread across a 7,278 sqm site at 74 Charlotte Street and 89 Bay Terrace, will be built behind the existing Wynnum Shopping Centre.

Ora, meaning ‘edge’ in Latin, has been designed by Ivory Collective and will comprise 275 apartments, with the amalgamation also planned to be home to retail space, as well as two-levels of commercial space.

“Ora is a development that intertwines the beautiful bayside environment of Wynnum with the ease and luxury of unit living,” architecture firm Ivory Collective noted in their design statement in the development application.

There will be 275 apartments in the development, made up of 54 one-bedroom, 148 two-bedroom and 67 three-bedroom apartments, along with six three-bed plus multi-purpose-room penthouses.

Ora’s floor plate is designed to orientate and capture as much of the East as possible, allowing for maximum exposure to the easterly breezes and bay views.

Wynnum CBD apartment development, Ora tower proposed

A full recreation level is planned for level five, with a 528 sqm restaurant and bar, set around an expansive pool terrace as well as a wet deck, space, sauna and steam rooms, private cabanas, a cinema, barbecues, meeting rooms, wine rooms and function spaces.

“The recreational level on Level 5 creates a space for both the public and residents alike to enjoy the beautiful bay views and surroundings,” the statement added.

Drawing inspiration from the Wynnum foreshore in both its material and palette and building form, Ora is made up of clean off-white concrete and bronzed feature cladding and batten, reflecting the warmth and clarity of the Wynnum/Manly beach front, Ivory Collective noted.

Article source: www.urban.com.au
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Brisbane

Barwon secures Princess Alexandra Hospital car park

Barwon secures Princess Alexandra Hospital car park

Barwon Investment Partners has snapped up a multi-level car park and medical centre on a site with significant development upside opposite Princess Alexandra Hospital.

The Woolloongabba asset at 250 Ipswich Road is setting the healthcare focused fund manager back around $95 million, reflecting a circa four per cent net passing yield.

The property contains an eight level, 773-bay garage attached to a two floor wellness centre with 21 tenancies, anchored to Gabba Dermatology, Brisbane Cardiology and Allied Health; the Weighted Average Lease Expiry is nearly seven years.

A pedestrian overpass connects the building to the Princess Alexandra Hospital, also a major teaching campus, employing 6810.

The 5106 sqm block has significant upside – up to 15 storeys based on its zoning, according to JLL’s Seb Turnbull, Elliott O’Shea and Simon Quinn, who marketed the asset with a Blight Rayner scheme.

BIP invests again

Established in 2006, BIP holds a property portfolio worth $2.3 billion.

Its medical related product, much held in a Healthcare Property fund, is priced at about $1.4b as at March, 2022.

Seven months ago, for the trust, the manager paid Forza Capital $34.7m for a South Brisbane medical centre – not far from 250 Ipswich Rd – and two Canberra assets including Belconnen’s Ginninderra Medical & Dental Centre on nearly a hectare.

Also late last year BIP spent $75m for a 12 level St Kilda Rd office majority leased to Alfred Health.

More to come.

 

 

Article source: www.realestatesource.com.au

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Brisbane

Brisbane’s Office Market Greenlit for Business

Brisbane’s Office Market

Brisbane’s office market continues to shake off the pandemic doldrums with two new commercial towers approved in the CBD and fringe suburbs.

Property owner PGIM and development partner Indema’s plan for a bold adaptive reuse of a 1970s commercial building at 444 Queen Street has won approval.

The bronze 22-storey tower opposite Customs House will be stripped back to its core structure and completely remodelled with a new podium, curtain wall facade and an additional two-storey sculptural canopy.

Indema director Michael Bruderlin said they would be targeting a net zero certification for the building upon completion in the first quarter of 2024.

Bruderlin said Hutchies had been engaged in an early contractor design and construct contract to help de-risk the project and better understand the technical requirements.

The Fender Katsalidis-designed tower follows in the footsteps of another of its commercial adaptive reuse projects in Brisbane, Ashe Morgan’s Midtown, now the headquarters for Rio Tinto.

Bruderlin said retaining and repurposing the existing building is 400 per cent more environmentally friendly. Retaining the existing concrete structure provides a 70 per cent saving in embodied carbon.

The project will rejuvenate a 48-year-old building at the end of life into an A-grade commercial office asset and increase the net leasable area 40 per cent.

Bruderlin said the project would have a quicker turnaround than a normal demolish and build project and it would use clever design initiatives to increase floor plates and create a better value proposition for the asset.

PGIM purchased 444 Queen Street for $54.4 million from the Public Trustee of Queensland and Abacus Property Group in October last year.

Cornerstone has also won approval for a commercial development in the city fringe suburb of Fortitude Valley.

The Bureau Proberts-designed tower will capture the heritage brick character of the Fortitude Valley centre “borrowing from the intent of these buildings but with a stridently different and contemporary expression”, planning documents said.

“This approach is a deliberate counterpoint to the strong and solid brick structures of the immediately adjacent 47 Warner Street and McWhirters buildings.

“Brickwork or masonry is not used as a material in deference to these neighbouring buildings allowing them to become more evident and make a clear statement about the era of their inception.”

The 28-storey commercial tower at 251 Wickham Street features a stepped slanting facade fronting Warner Street, with a four-storey lobby, and an inverted podium.

There will also be a rooftop terrace, 20m pool and open-plan gym in the commercial tower, with retail offerings at the base of the building.

Brisbane’s metropolitan office market vacancy was at 16.3 per cent at the end of March and there were few transactions across the quarter, according to Colliers research.

But yields remained steady, and well above other capital cities, while incentives remained stagnant at 40 per cent.

 

 

Article source: www.theurbandeveloper.com

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