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Why Brisbane is still a good market to invest in for 2022

2022 Market Opportunities

Looking to invest in property in 2022? There are a few markets which we believe are presenting strong capital growth prospects this year. One of our top picks is Brisbane, where we believe there is a lot of unrealised growth potential. 

Over the next few articles we’ll touch on the various markets which we’re tipping for strong performance this year. In this article, we’ll focus on what’s driving the Brisbane market and why we believe the potential remains so strong. 

Here’s what makes Brisbane a smart investment choice this year. 

Brisbane is leading the pack on interstate migration 

Unlike Australia’s other capital cities which have been losing people to the regions or other states over the last two years, Brisbane has been attracting people. In the March 2021 and December 2020 quarters, Brisbane gained the most people through net internal migration compared to the other capital cities, attracting 3,300 and 4,800 new migrants respectively. 

As the population increases, so too does the demand for housing. This is good news for investors who should see a subsequent increase in capital growth and a tighter rental market.

In the 12 months to June 2021, nationally our overseas migration was really poor with most states recording a negative figure due to the border shut-downs. Over that period, the best indicator for population movements is our interstate migration figures. The figure below shows the net interstate migration figures for each state. 

As a result of this strong migration, Corelogic reported that Brisbane’s median house price increased 32% last year to $809,000. The performance of Sydney’s market over 2021 means the gap between Brisbane and Sydney remains wide.

As per the above figure, Brisbane’s median house price is $600,000 less than Sydney which highlights how strong the value proposition remains, especially when you consider the minor gap in median incomes. ABS indicates that Sydneysiders only earn approximately 12% more than people in Brisbane yet pay almost double the price for a home. 

As the Sydney market softens, Brisbane will heat up

History reveals there is an inverse relationship between the Sydney and Brisbane markets. As Sydney rises, Brisbane stagnates and vice versa. As interest rates begin to rise and stock volumes increase, we expect the Sydney market to begin to plateau. 

The figure below shows Brisbane’s median house price as a percentage of Sydneys. This tends to fluctuate between Brisbane sitting at half the price of Sydney and then reaching about 75-85% of Sydney’s median house price. The periods in which the gap between the two cities shrinks is generally when Brisbane performs strongly catching up. 

The reason for this inverse relationship is that when Sydneysiders are priced out of the Sydney market, many will choose to move to Brisbane. We’re already seeing Sydney house prices stabilise and so should subsequently see growth in Brisbane this year and beyond. 

Additionally, the extended lockdowns that took place in Victoria has resulted in increased interstate migration levels from Victoria to South East Queensland.

Brisbane’s housing affordability and lifestyle will beckon 

There’s a reason that when Sydney or Melbourne become too expensive, people tend to migrate north, as Brisbane boasts far greater housing affordability. According to Domain, in the December 2021 quarter Sydney’s median house price surpassed $1.6 million. Brisbane’s median house price was less than half that, hitting just over $792,000. 

With lockdowns now hopefully behind us, we’re likely to see many workplaces require their employees to return to the office more frequently. That means that for those looking to move out of Sydney or Melbourne, they won’t have the same opportunities to relocate to the regions and work remotely. Brisbane is an excellent alternative, offering strong job prospects coupled with an excellent lifestyle, warm climate and laid back culture. For all these reasons, Brisbane is a highly desirable place to relocate to. We should see more professionals make the move to the city, contributing to a tighter rental market and more sales activity, subsequently pushing up prices. 

Infrastructure development is accelerating, led by the 2032 Olympics 

In part thanks to the Brisbane 2032 Summer Olympics, Brisbane is undergoing an infrastructure boom which continues to fuel population growth.

Outside of the infrastructure development associated with the Olympics, other projects like the Cross River Rail, Queens Wharf and the Eagle Street development are all contributing to revitalising the city. The 2032 Olympics are also giving Brisbane name recognition as an international city, which also contributes to demand. 

Brisbane’s rental market is tightening 

Vacancy rates in Brisbane are at record lows. In December 2021 the vacancy rate was 1.3%. The last time the Brisbane market experienced such low vacancy rates was almost 15 years ago, when Brisbane’s house prices were experiencing significant growth.

As a result, Brisbane’s rental market has risen for five consecutive quarters, contributing to record high rents across the city. Demand for rentals is outstripping supply which is great news for investors who can easily line up a tenant and achieve a strong rental return. 

Next steps

While we’re anticipating that Brisbane will experience growth across the board, some areas will outperform others. Some suburbs will still be vulnerable to oversupply due to a high number of high-density apartment complexes, whereas other inner city suburbs with low supply and high demand are likely to be consistent performers. As always, investors should look for properties and suburbs which appeal to owner-occupiers, with a good rental return. 

Looking to invest in Brisbane? Chat to us today to discuss your property investment strategy in more detail.