The ride ahead is bumpy—investors beware! Despite the fact that Brisbane emerged as one of the four capital cities that recorded steady price increases in 2018, economists warn that 2019 is bound to be a difficult year for property owners in the south east part of Queensland.
Last December, the cost of houses in the Greater Brisbane soared by 2.3 percent to a good $525,000, with property values in Sunshine Coast rising by 6.3 per cent and 3.8 per cent in the Gold Coast during the same period.
According to Antonia Mercorella of the Real Estate Institute of Queensland (REIQ), the south-east market was more attractive as compared to Sydney and Melbourne as the increasing number of people from New South Wales move to the area hence causing a rise in demand.
Interestingly, over 80 suburbs in Brisbane have houses that have an average asking price of $500,000 or even lower.
And regardless of last year’s sales figures, the confidence levels of the state’s property have been plunging to its lowest in the past five years.
The new ANZ/Property Council study reveals a sharp decline in the market’s outlook, attaining 118 index points within the first quarter of this year.
The head of investment at AMP Capital Shane Oliver noted that the industry’s 2019 poor outlook was caused by the negative publicity about the property market.
Generally, Sydney and Melbourne have been dominating the property space, with both cities experiencing a 10 per cent decline in property prices.
As the Brisbane property market out shined that of Sydney and Melbourne, Mr Oliver predicts that price increases this year would be affected by the tightened lending terms.
“When you go to talk to the bank, they’re a lot tougher,” he remarked.
In fact, financial institutions will want to assess your income levels, how you spend your earnings including how much you use on coffee every other day.
Ms Mercorella added that given the latest findings by the banking royal commission that await approval and the impending federal election have left a good number of buyers simply startled.
“That’s creating some level of nervousness among investors and we’ll just have to wait and see its outcome,” she said.
Notably, the projection favours the rental market in Brisbane.
In the Domain Rental Report recently released, rental prices in Brisbane had gone up for the very first time in nearly three years.
By the last quarter of December 2018, the average cost of renting a home in Brisbane increased by 2.5 percent to a good $410 per week.
Mr Oliver added that the surge in newly constructed apartments in the area had hit its highest point.
“That supply surge has run its course, unlike in Sydney and Melbourne,” he said.
In 2018, approvals for new dwellings in Queensland dropped by 20 percent.
“Queensland’s population growth is quickly edging above that seen in NSW at a time when there’s a decrease in supply of new apartment dwellings availed to the market,” Mr Oliver noted.
In a statement, Rebecca Herbst, a Brisbane CBD real estate agent revealed that she was continuously handling interstate inquiries.
“It’s more affordable in Brisbane than Sydney and Melbourne so definitely they see the value,” she concluded.