If you are looking to buy an investment property in Queensland this year, it is still a good time to take advantage of the short term growth, and the long term growth prospects surrounding the Brisbane 2032 Olympics.
However the same factors that are driving property price growth have created increased competition amongst buyers and are increasingly making it difficult for investors to source the right property.
We explore some of the key opportunities and challenges facing investors planning to buy in Queensland this year.
Sustained house price growth
As recently reported by CoreLogic, Brisbane and regional Queensland (along with Adelaide) are the only broad regions in Australia where there is no evidence of value growth slowing just yet, with the monthly rate of growth reaching a new cyclical high in December. These regions are benefiting from healthier levels of affordability when compared to Sydney and Melbourne, strong interstate migration and consistently low advertised stock.
If the opportunity arises to buy an investment-grade property that fits your budget it is definitely the right time to buy to benefit from this growth! Even if you pay top price, if it is a quality property in the right location, it will benefit from capital growth over time. In addition, the overall appeal of the investment-grade property is likely to lead to a higher rental yield which assists with the cash flow to hold the property.
Throughout January we have attended numerous open homes (for sale and rent) in Brisbane, and encountered between 20 to 40 groups turning up to each property. Majority of the buyer demand we are seeing is driven by local owner occupiers, who are emotionally invested and competing with interstate buyers, which in turn is driving the price growth.
Interstate migration fueling demand
The influx of people into Queensland over the last two years has put pressure on rental and property demand and prices thereof. And it is not looking to slow down this year. A lot of buyers who are forced out of the market due to affordability are looking for rental properties, putting even more pressure on the already tight rental market.
Brisbane house asking rents rose 4.3% in the December quarter – a 12.9% increase year on year – to $480 a week, as reported by Domain Group.
The opportunity here is to seek investment-grade properties in areas where there is low rental supply to take advantage of the rental growth and high demand.
Considering there are limited options on the market right now, particularly in South East Queensland, an alternative is to look at buying land and building a property in an area with a tight vacancy and growth potential. If you lack experience and the time to do this, we can help with sourcing and securing land as well as assisting with the entire build process. To learn more, view our most recent case study on this here.
Regional popularity continues
The rise in remote working has been the key factor in people relocating to regional communities, not just in Queensland but across Australia, and with the ongoing risk of Covid, this trend is tipped to continue this year.
This has helped and will continue to support property price growth, as owner-occupiers, not just investors, are buying in these regions, and owner-occupiers drive market growth.
According to Realestate.com.au, the Queensland regions that had the biggest growth in rent (Nov 2019 vs Nov 2021) were all coastal areas: Sunshine Coast (23%), Wide Bay (18%), and Mackay Isaac Whitsunday (14%).
These regions are attracting interstate renters and buyers due to warmer weather, beaches and the lifestyle. Not to mention the ability to afford to buy in these regions after selling a home in Sydney or Melbourne.
The negative effect of this trend is that a lot of the locals and hospitality and tourism workforce in these areas are being priced out of the owner occupier and rental markets. Meaning they have to move further away from where they work, to rent or buy property at more affordable prices, which then provides investment opportunities in these locations.
As a qualified property investment advisor, my goal is to minimise your risk and ensure you remain financially secure. If you are unsure about your choice of property or location and need assistance with sourcing, negotiating and securing the right property investment, don’t hesitate to reach out.
I can also introduce you to an A grade team of professionals, such as accountants, financial advisors, mortgage brokers, solicitors and property managers, to help you make informed and confident investment decisions.