With Christmas just around the corner, this will be our last communiqué for 2018. So we thought we’d spread a little real estate market Christmas cheer.
Despite all the media musings on impending housing market doom, Brisbane has every reason to enjoy a merry Christmas. Australia has many distinct residential markets. While Sydney and Melbourne are feeling the inevitable consequences of their unsustainable house price boom, Brisbane has no such worries.
So here are our Top 6 reasons to expect 2019 will be happy New Year.
As Deloitte Access Economics concluded in its 2018 post-budget Queensland Business Outlook: “Queensland continues its road to recovery.” High coal prices, more tourists and government social spending are all providing boosts to the economy, along with population inflows.
The boom we didn’t have
Remember the lesson of ‘The Tortoise and the Hare’? Slow and steady wins the race. Maybe the real estate equivalent is valuer Herron Todd White’s recent description of Brisbane as “unexciting and safe”, a “modest but positive performer when it comes to capital growth.”
Not for us Sydney’s crazy 85% property price surge since 2013. So, no need for any correction either. According to the QBE Australian Housing Outlook 2018-2021 and BIS Oxford Economics, in contrast to the falls in Sydney and Melbourne, Brisbane’s median house price is expected to increase by 11.3% over the three-year period.
Economic growth and exports
Research by SGS Economics and Planning shows Brisbane’s GDP growth was 3.4% in 2017-18, the highest rate since 2011-12, taking it to $170.5 billion. Deloitte tells us the economic outlook for Queensland over the next five years is steady as she goes, hovering around 2.75%, after hitting 3.0% in 2018-19.
Stronger global economic conditions are lifting demand for the key exports that underpin our economic success – commodities and agribusiness. Queensland’s resources industry was valued at $62.9 billion this year, up 14% on the previous year, driven by high demand.
Low Aussie dollar
The lower Aussie dollar continues to help drive our international service exports, including education and tourism. Queensland’s domestic visitor economy surged by 10.3% in FY2018, while international visitor spending up 8.1%.
Recently, National Australia Bank currency strategist, Ray Attrill, said there was every chance the AUD/USD might take another look at the 70-cent level in the first-half of 2019. It’s also worth noting that expats start to buy property back home when the dollar gets to 70 cents.
A significant pipeline of huge infrastructure projects is underwriting growth, with massive positive implications for net interstate migration and jobs growth. A quick tally of the biggest adds up to $17 billion worth of major infrastructure to be delivered between now and 2024.
Headlining the list are Cross River Rail ($5.4b), Queen’s Wharf ($3.6b), Brisbane Live $2b), a revitalised Waterfront Precinct ($1.4b) and the new parallel runway at Brisbane Airport ($1.3b), critical capacity-building infrastructure to service forecast passenger growth, set to soar to around 50 million by 2035.
Population & jobs growth
Net interstate migration, a key driver of housing demand, has rebounded. House price refugees from NSW have once again made Queensland the most popular state for interstate migration. With our added lifestyle appeal, Brisbane looks very attractive indeed.
Queensland’s resources industry creates one new job every 40 minutes. And because this time the resources upturn isn’t associated with a short-term construction phase, the benefits will last longer. Improving employment growth and a return to job creation are terrific signs.
Tight residential vacancy rates
After all the hand-wringing about Brisbane’s apartment oversupply, the unit market downturn hasn’t turned out to be as severe as it could have been.
Developers have self-regulated, delaying or shelving projects to stem the flow of new stock. Meanwhile jobs growth and higher incoming migration have boosted demand for accommodation. Rentals are tight, with Brisbane’s vacancy rate at just 2.9%, down from 3.5% a year ago.
One final point, while we know there’s been credit tightening in the wake of the banking royal commission, it is felt less in the Brisbane market because of the excellent fundamentals we’ve outlined.
Premium and prestige markets are also less affected, remaining strong due to purchasers’ stronger financial positions. And, don’t forget, cash is still very inexpensive. The official interest rate remains low, unlikely to increase before at least 2020.
Where does all this leave Brisbane on the ‘property clock’? Herron Todd White says Brisbane is a “rising market”. And we’d have to agree.
So, when you raise a glass and shout ‘Happy New Year’, think of these positive reasons to welcome 2019.