Brisbane Investment Property – Is a Boom About to Happen?
There are several, highly significant, reasons why the Australian real estate property market is fundamentally different to the real estate markets of countries such as the United States, the UK and other developed nations,
The first major difference is that while the USA suffers from an oversupply of property, Australia suffers from an acute shortage of property, particularly rental properties.
At a time when the United States was practising fairly reckless lending policies, allowing people who could not really afford to repay loans to take them on at low teaser interest rates, the lending practices of Australian banks were much shrewder, providing a greater degree of protection for the Australian residential property market.
Population shifts to the warmer northern part of Australia means Brisbane’s real estate market in particular has enjoyed a steady population growth of around 3% per annum, at a time when developers are finding it tougher and tougher to get financial approvals to commemce new development projects.
In practice, an undersupply of new stock, combined with increasing demand usually means rising prices. In addition, wages are now growing again at a healthy pace, according to reports from Commsec.
Many factors are now combining to give Brisbane investment properties a significant edge – the Australian economy is now showing signs of rebounding, property vacancies are at levels of just 1-2%, wages are once more rising, and interest rates are low. Under these conditions, it would be surprising if property prices in premium Brisbane suburbs did not continue to rise.
Surprisingly, some people are willing to pay to rent property today. A single bedroom Brisbane CBD investment property can rent for $500+ per week in some cases.
Demand is outstripping supply right across Brisbane, vacancy rates are falling, and rents are rising. Competition for the rental accommodation that is available is fierce. There are Brisbane suburbs where the cost of the typical mortgage is less than the cost to rent; it would be surprising to see investors not returning to the market given this environment.
As this happens, momentum starts to build, and property prices experience upward pressures. Tough for tenants, but a real boon for property investors looking to build wealth through Brisbane investment properties.
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