Reasons to Invest

Why invest in Brisbane property?

Queensland's Growth

The population figures for calendar year 2005 were released by the ABS earlier this month. Australia’s population grew by 242,000 new residents during 2005, up from 227,000 each year during 2004 and 2003. The reason for the increase was two- fold; firstly, natural increase (births exceeding deaths) went up 7% over the last twelve months, thanks mainly to the $3,000 baby bonus (rather than additional longevity); and net overseas migration increased 6%, or by 6,300 during 2005. During 2006/07 the Federal Government anticipates overall migration to Australia at around 14,000 (up from 146,000 last year), of which 68% will fall within the skilled category.

Queensland remains the fastest growing state or territory with an annual increase of 74,800 new residents during 2005.

Whilst down on the 79,775 estimate for 2004, the intake for the December quarter was 20,500, up from just 16,810 during the three months to September last year. Higher interstate migration —mosfly from New South Wales —was the reason for the lift in Queensland’s population growth over the last three months. Given the recent budget imbalances between the two states, we envisage that more migrants could be lured north. Such a movement is likely to gather momentum after the 1st July next year, as superannuants capitalise on the recent windfalls given in the Federal May budget.

The acceleration north, however, also assumes that the Queensland Government delivers on its budget promises - We also expect that Queensland is likely to see the greatest lift
in natural increase over the next five to ten years. The average age of a migrant (which accounts for 62% of Queensland’s annual population increase) to Queensland is just 30 years, but also important is that Queensland, unlike the other states/ territories, has exactly the same number of females as males living in the state.

The imbalance between male and females can be as high as 5% in the other Australian states/territories, with females exceeding males in all areas except in Western Australia
and in the Northern Territory.

Melbourne is the fastest growing urban area across Australia, with 41,250 new residents during 2005.

Brisbane came second with 33,300 new residents. Sydney’s population grew by 30,000 during 2005, and Perth saw 23,200 new residents during calendar 2005. The Gold Coast is the fifth fastest growing area across Australia, with 11600 new residents during 2005. The population across South East Queensland grew by 53,100 —on target for the anticipated 1 million or more by 2026. Based on high series data modelling (the more realistic model, in our view) Brisbane’s population is likely to exceed two million people within the next five years, and 4.5 million people will call Queensland home. By 2026 (just 20 years away) Queensland will be the second most populated state or  Territory in Australia.
Brisbane, currently, is the world’s second fastest growing city.

It is estimated that by 2026, close to one quarter of the Australian population will live within 50 kilometres of the coast, and between Coffs Harbour and Hervey Bay.

How the market will perform over the next 3 years.
Property Report by BIS Shrapnel
June 2006

Housing affordability in Australia has hit its lowest point since the residential property boom of the 1980s, a report has found.

In its survey on residential property prospects, industry analyst BIS Shrapnel said housing affordability would remain a major constraint on residential property markets over the next two years.

Homeowners can expect a further slowing in residential property price growth over the next three years, however rebounds in first home buyer interest, low unemployment and solid wages growth will mitigate the fall.

BIS Shrapnel director of building and construction Robert Mellor said while Sydney remained the most expensive capital city, it would soon lag a national recovery in house prices.

“Regional centres have been attracting increasing numbers of home buyers due to a lower median house price compared to capital city markets,” Mr Mellor said.

“This solid demand will now support modest price growth.”

BIS Shrapnel said Sydney house prices fell in 2004/05, following a 57 per cent rise between June 2001 and March 2004 which made buying a house off-limits for many buyers.

The median NSW house price is expected to fall by three per cent over the three years to June 2009. Victoria’s median house price is expected to rise eight per cent over that period while Queensland leads the pack with forecast growth of 12 per cent over the period.

But the Reserve Bank of Australia’s May quarter of a percentage point interest rate hike to 5.75 per cent - its first move in 14 months - was also expected to weigh on affordability somewhat.

Regional areas such as Newcastle and Wollongong in NSW had declined over the past two years, however these centres were expected to stage a gradual recovery over the next three years.

Underlying demand in regional areas is forecast to remain strong relative to supply with affordability expected to improve in Sydney.

Further north, BIS Shrapnel expects Brisbane to record four per cent per annum growth in house values between 2006/07 and 2008/09, due to a shortage in housing supply.

Perth and Darwin were the only capital cities to experience strong price rises in calendar 2005 with Perth continuing to benefit from the resources boom.

However, Perth’s house price growth is expected to slow to three per cent in 2006/07.

However, Mr Mellor said the Perth price growth rates were not sustainable and would eventually fall in line with the rest of the nation.

After a period of extraordinary growth, the Brisbane market has hit an affordability barrier and is expected to suffer from the worst affordability crisis since 1990.

But while the recent interest rate rise is only expected to significantly affect purchasers on the fringe of the market, BIS Shrapnel said inflation was likely to force rates higher in 2006/07.

“While we are forecasting a rise in interest rates over 2006/07, we expect wages growth to more than offset this increase,” Mr Mellor said.

Forecast median house price nominal gain, June 2006 to June 2009 (percent)*

State Percentage change (June 2006 - June 2009)

NSW - 3%
VIC  + 8.0%
QLD + 12%   
WA + 3%
TAS + 4%
NT - 1%
ACT + 4%
SA + 5%

Source BIS Shrapnel Residential Property Prospects, 2006-2009.