Is Brisbane the New Property Hotspot?

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Realestate.com.au recently reported that within five years, Brisbane will become the best performing capital city housing market. The premise of the argument is that affordability and migration rates will increase demand for housing and capital gains and that this will be compounded by the improving Queensland job market. Whilst I don’t doubt there will be a significant growth in our other capital cities including Brisbane, let’s be realistic. The people driving and generating wealth in our nation are not in Brisbane. The Queensland capital has had 20 years of being the affordable little brother to Sydney and Melbourne, but has not been able to reduce the gap due to the demographics of it migrants. It’s like comparing New York to Philadelphia.

Why?

Because, put simply, Sydney is Australia’s wealth centre. Workers who migrate to Sydney do so for the high wages and opportunities to create wealth. There are more professionals climbing the corporate ladder and more start ups trying to make their first million. This is inextricably tied to the property market – because this demographic can afford to pay premium prices when demand is short. Wages are on average, 11% higher in Sydney compared to Brisbane. More Sydneysiders are working slightly longer to build their wealth – with almost 46% working longer than 40 hours per week. Finally, there is currently a whopping 4% difference in unemployment in Sydney compared to Brisbane, with the later rating higher.

Brisbane is where people go for a lifestyle change or to slow down. Despite the growth in Queensland’s interstate migration recently, both NSW and Queensland recorded similar numbers of interstate arrivals. According to the ABS, 31% of Aussies over 65 who migrated interstate went to Queensland. This fact alone would probably negate any increase in demand on the property market (as these migrants are no longer in the wealth creation stage of life).

Even with a growth in population, Brisbane will have ample supply near the capital city to ease demand compared to Sydney where new land releases are up to 70km from the CBD. Brisbane also currently has 8% unoccupied dwellings. With Sydney having more than double the population of people trying to make more money, Brisbane is unlikely to out perform Australia’s premium city.

So what does this mean for me, I hear you say?

A property in Brisbane would make for a sound investment and a stepping stone to building your property portfolio, but just don't expect skyrocketing capital gains.

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All statistics sourced from ABS Quick Stats unless otherwise noted.