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Reproduced with permission.
It was a long held maxim amongst Brisbane investors to favour housing over apartments. This was due to the availability of affordable homes, either established or being constructed, relatively close to the CBD and established transport and retail infrastructure. Housing was preferred due to considerations such as land component, single title and yield.
As suburbia continues to spread, with new land available 20, 30 even 40km from Brisbane, many investors are seeking property nearer the city, rather than these new developments. This has seen apartments’ values climb significantly, as they become more popular with both investors and renters.
Brisbane’s property market at present is in a period of depressed activity- market confidence took a hit post GFC; first home buyers are without financial stimulus and therefore are not competing with investors as often due to smaller numbers entering the market; property is taking longer to sell and achieving lower prices than 12 months ago, while at the same time, there continues to be more property coming to the market.
An interesting aside to this is that concurrently, rents are on the rise, and the lifestyle choices of our newest renters have placed apartments squarely in their sights. The greatest age demographic living, and seeking to live, in these areas is below 30. Location to the CBD, social hubs, retail and entertainment has increased demand for apartments in the inner city to mid- inner city fringes. Vacancy rates in this proximity are below 2%, with yields in many cases averaging 5-7%.
A 2 bedroom 2 bathroom apartment in Toowong, which is 5km to Brisbane CBD, sold in January for $350,000*, and rents for $380 per week, which is a yield of 5.6%. This is an example of the kinds of returns available in that particular price bracket- in many cases, the greater the purchase, the higher the yield.
For those considering investing in Melbourne or Sydney, strong capital growth and a higher rental yield can be delivered in Brisbane given that comparable property in the two major cities delivers around 3.5% – 4% rental return.
There is ample opportunity for the shrewd investor in Brisbane at present, provided the investment fundamentals are adhered to. As Warren Buffet once said “Be greedy when everyone is scared, and be scared when everyone is greedy”.
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*Source RP Data
