Tuesday, January 06 2015
Saw this article this morning. Certainly aligns with some of our observations.
5 BIG reasons to think South East Queensland in 2015
Your Investment Property Magazine Predicts Queensland to outperform all other States for Capital Growth in 2015 and there are a number reasons why.
Much of the hype surrounding the Sydney market over the last 24 months has focused on the strong capital growth of Australia's largest city. Whilst 2015 is still expected to be a good year for NSW, Queensland is tipped to out perform not just NSW but all other states for Capital Growth in 2015.
Angie Zigomanis, BIS Shrapnel: Queensland prices haven't moved much for a long time, so it has become increasingly affordable. We think Southeast Queensland, as well as Brisbane, could finally be on its way to becoming a property market powerhouse.
(Your Investment Property Magazine, January 2015)
The median house price in QLD is now sitting at $480,000. Compare this to NSW at $810,000 and VIC at $660,000. Buyers in Qld have significantly more buying power and options available to them particularly at the $500,000 price point. Not only can the typical investor actually get into the property market but they also have many more buying options available to them, particularly in the South East Queensland hotspots of Brisbane, Gold Coast, Logan, Ipswich, Toowoomba & the Sunshine Coast.
(source: Deloitte Access Economics & BIS Shrapnel)
Largely, discussion of Sydney's outstanding 2014 centred on double digit capital growth in the chronically undersupplied western corridor and city fringe. Less so was there a focus on the relative weak rental yields (3.0% on average) that investors can expect when buying in these locations. Rental yields in Victoria (2.9%) also weakened as rental prices failed to keep pace with property prices in 2014. The bright spot for some years now is Queensland where average rental prices have remained higher at 4.1% and looking at South East Queensland in isolation this figure is likely in excess of 4.8% or some 40% more than key Sydney or Melbourne locations.
Australia's prudential regulator APRA has already indicated that it "may institute further supervisory action" in relation to record low interest rates that could fuel a property boom. This will mean even greater scrutiny on the serviceability of borrowers and an even greater emphasis on potential rental yields for investors.
(source: QBE Australian Housing Outlook 2014- 2017 & The Australian, Jan 5 2015)
Why constrain yourself to a $1 million apartment in Sydney returning $600 per week with similar capital growth potential as a 4 bedroom house in South East Queensland for $480,000 returning $500 per week?
Brisbane will be the next cab off the rank for Chinese Investment according to Greenland Australia Development director Kang Xue. Headquartered in Shanghai Greenland has joined forces with James Packer's Crown Resorts in a multi billion dollar hotel, apartment and casino development in Brisbane's CBD. He says that Chinese investment into Australian will increase further this year, "Melbourne and Sydney have been paid attention for a long time and I think Brisbane will catch up."
Aussie Home Loans founder John Symond says Brisbane will also attract more investors from NSW and Victoria next year, "Investors are looking for better value than in Sydney and Melbourne and they will go into regional areas and cities like Brisbane to get a better yield."
(source: The Australian, January 3 2015)
The Queensland economy has continued to improve despite a slow down in the resources sector. The pace of state Government cutbacks has slowed and there are also a considerable number of big, well spaced infrastructure projects in the pipeline.
Overall unemployment (5.3%) is less than both NSW (5.8%) and Victoria (6.0%). The weak Australian dollar has already had a positive impact on exposed industries such as tourism and also retail which now represents $60 billion to the Queensland economy.
Another interesting statistic is average weekly income. Despite a considerable difference in the cost of living between QLD and the other Big States NSW and Victoria. QLD's average weekly income is currently $1,116 slightly higher than Victoria ($1,096) and slightly less than NSW ($1,152).
(source: Deloitte Access Economics Business Outlook)