Hi, my name is Ben Everingham and I’m the director here at Pumped On Property and in today’s video, I’m gonna talk about where the Brisbane market is heading.
Good day there, my name is Ben Everingham and I’m the director here at Pumped On Property and we’re a buyer’s agency based in Brisbane who have helped our clients purchase over $100,000,000 worth of property up here. In today’s video, I’m going to talk about where the Brisbane market is currently heading. At the time of this video, it’s 2017. Obviously, this video is going to be relevant for a period of time, but like all cycles in property, certain markets perform at different stages.
At the time of recording this video, I really like the outlook of Brisbane and that’s why we’re buying it. In today’s video, we’re going to talk about a few different things. We’re going to talk about the positives and negatives associate with the Brisbane market and some of those stats and some of the information surrounding the market place according to a number of Australia’s leading analysts. Like always, I’m a positive guy. I look at the positive sides of most situations.
Today, we’re going to start with the positive stuff in regards to the Brisbane market. One of the things that I really like about the Brisbane market is it’s the third largest capitol city in Australia, which means it’s currently got the third largest population and it’s also got the third largest population growth at the time of recording this video. Over the last ten years, Brisbane, on average, has grown by around about 40,000 people per annum.
At the moment, there’s about 2.3 million people living in Brisbane, including myself, and that’s projected to grow to at least 3 million people within the next ten to fifteen years based on current annual growth rates. Population looks strong in Brisbane and obviously, population and location play a huge amount in regards to the supply and demand dynamics of any market place in Australia. A strong, long-term population outlook is very positive for the area.
Another thing that I wanted to talk about is jobs, job creation, and job growth. It’s no surprise that the markets in Australia with the highest incomes often have the strongest capital growth and as all of you know that have been following my videos for a while, I’m huge on capital growth, which means Sydney, Melbourne, Brisbane, and the quality markets of Australia as opposed to the more regional market places where your long-term capital growth is effected.
At the time of recording this video, Brisbane, over the last five years, has had about 12,000 jobs created per annum. What’s really interesting, between 2016 and 2017, the jobs in Brisbane have actually spiked dramatically up to 18,000 jobs created in the last 12 months, which is a 50 percent increase year on year, which is extremely interesting. Obviously, job creation is a positive sign that people are being drawn into the area and that the economy is starting to tick away and move again.
Some of the predictions … again, I don’t pretend to be some sort of magician or wizard that’s got a crystal ball and I’m looking out into the future, but there are some great companies in Australia like Michael Matusik with his Matusik Reports, like Residex and RP Data, like Herron Todd White and BIS Shrapnel. The predictions actually look strong. I got an email this morning. It’s May 2017 at the time of filming this video. Michael Matusik was predicting a five to seven and half percent gain in the value of houses in the Brisbane market in the next twelve months, which is very, very exciting.
Residex was bought out by RP Data, Australia’s leading property aggregator in Australia. They were bought out in 2016, which means the quality of the data going into the Residex reports is only due to improve. Basically, they’re making predictions based on growth in the next five to eight years. There was a number of suburbs in this report, I think ninety-two or ninety-three odd suburbs, that I just purchased and the growth predictions, according to Residex for the Brisbane suburbs, looked to be somewhere between four percent and eight or nine percent per annum depending on the actual suburb.
Again, those Residex reports can be great tools for identifying suburbs to focus on. Not all of the suburbs are created equal and not all of those predictions are going to become true, so make sure you do your extra due diligence and research on top of it. It’s positive to see that there are still growth opportunities in this market over the five to eight year period. As of the time of filming this video in 2017, the stage of the property cycle that Brisbane is in, according to Herron Todd White, is at the start of the recovery stage at 8 o’clock on the property clock.
8 o’clock is a nice time to buy because it’s started to move and it’s working its way to peak of market. That’s a very, very positive sign in terms of investing in the Brisbane market at the moment. It means you’re not necessarily buying somebody else’s profit, which I never want to do personally. Another thing that I love about the Brisbane market is it’s performed shockingly over the last ten years. In the last ten years, when you take out inflation of two to three percent per annum, the growth has just been horrible in Brisbane.
What I’ve also noticed looking at RP Data’s May predictions report or May market update report is that a number of the capital cities including Sydney, Melbourne, Canberra, Adelaide, Hobart, and even Darwin at the time of recording this video in May, have been beginning to move in a positive direction, where Brisbane has almost sat still.
Brisbane, in the last twelve months, has done on average, 2.1 percent. I say on average because there’s certain suburbs in Brisbane that I’ve bought and my clients have bought in the last twelve months that have grown by twelve to fifteen percent and there’s other suburbs that have gone backwards by five percent. There’s great opportunities, even in flatter market places, and I think as more and more interstate and investor inquiry moves into the market, plus people cashing out of the Sydney and Melbourne markets and relocating to Brisbane.
As a long-term projection, ten, fifteen, twenty years, the outlook for Brisbane looks extremely positive. What I’ve noticed also is that the inquiry in Brisbane is strong as a result of local demand for owner-occupied style properties and people moving further towards the city in the more quality suburbs, as well as interstate demand through investors. We’ve definitely seen inquiries spike at the start of this year for our business, which is a positive sign that more demand, less supply, potentially a more positive result over the longer term.
Again, something that I wanted to touch on … I just read an incredible book and if you haven’t picked it up, it’s by John Linderman and it’s called Mastering the Australian Housing Market. It’s a great book in terms of understanding the patents and the trends in the Australian property market over the last 100 years. What John goes on to say is that up until about 1980, the average annual price growth Australia-wide for houses was around 10 percent per annum. During the 90s, it began to slow down to seven and a half percent per annum Australia-wide. Then, in the 2000s, it really slowed down to more like five percent per annum.
This whole concept of property doubling in value every seven to ten years is just gone. Until wages catch back up or the government opens the gates and allows heaps of internationals to come in and flood the market in terms of population growth, the types of returns that your parents received or for those of you that were lucky enough to be born a while ago, that you received during the 70s, 80s, and 90s, might be gone for now. That said, obviously, Sydney and Melbourne have just had an incredible run.
The reason history is important when you look at the Brisbane market place is that even over the last ten years, while the growth was subdued on average, it still, on average, grew by 4.9 percent per annum. I think that’s a positive sign in terms of because of the number of people that live here, because of the average incomes, because of the positive population growth, growth rates continue even through a relatively unstable period of time with very average growth rates.
I hope that was interesting and insightful. I’m personally buying a lot of property in Brisbane for myself at the moment. I really like the long-term outlook. Again, nothing is about hot spotting with our business, It’s not about getting in and getting out, it’s not about flipping properties. It’s about buying extremely high-quality, well-located and owner-occupied style suburbs with great long-term outlooks in the hope that fifteen years from now, the property that you buy well, that you add some value to over fifteen years, and then that you sell, has doubled in value over that period of time.
You can take that money and pay off your own home, put it in the bank, put into shares and dividends to get a guaranteed or consistent return, or you can put it into paying off some other properties completely outright so that you can live the life that you’re looking for. Some of the negatives associated with Brisbane, and there’s definitely negatives associated with every market in Australia, it’s no secret right now that there’s an oversupply of units in Brisbane’s inner city right now that may last five years.
I think the effect of this oversupply is going to be significant for a lot longer than five years and it’s going to put a bad taste in people’s mouths around units in Brisbane for a long time to come. Just avoid that market completely if you can, the unit market in Brisbane.
Obviously, in 2011, we had some severe floods in Brisbane. It’s still, for some reason, freaking people out. The way that I explain flooding in Brisbane is that you would never buy a property without doing a flood search on the local council’s website and then getting your solicitor to add a due diligence clause to your contract to double check that there’s no flood related issues with your property. If there is, walk away from that property because those issues compound over time and almost every time you try and sell that property in the future or get it revalued, it’s going to be devalued down and there’s not going to be many people that are going to want to buy it. Again, there are certain suburbs in Brisbane that are notorious and have really bad issues related to flooding and there’s some great suburbs that have zero issues. Within suburbs, there are certain streets and pockets that you’d avoid, but check out those flood searches. There’s some great mapping tools on the Brisbane City Council, Morton Bay City Council, and Logan City Council’s websites now after those floods to help people interpret what’s going on. Just be careful with that stuff.
Some of the other negatives, I suppose, is that Brisbane, for a lot of people, particularly in Sydney and Melbourne, is between one thousand and two thousand K’s away. It’s kind of out of area. I know, as a Sydney resider myself and someone that grew up on the beaches of Sydney, that Brisbane is just way up there. It’s that regional town with that good football team, but it hasn’t been really top of mind. I thought the same way for a long time until I looked at the data and realised how affordable it is as of 2017. It has some of the long-term things that we talk about that are important, like people’s income as a percentage of their total debt, looks really, really interesting and very specific. Not all suburbs, very specific suburbs in Brisbane. These are some of the negatives associated with it.
The last thing I wanted to touch on in terms of negatives is that not all suburbs in Brisbane are created equal. A really good example of this is a suburb to the northern side of Brisbane. I’m not going to talk about suburb names because I don’t want to point fingers, but there’s a suburb 29 kilometres from the city and there’s a suburb 28 kilometres from the city. Now, this one suburb 28 kilometres from the city has great income, great demographics, great long-term potential for growth, extremely premium suburb. This other suburb 29 kilometres from the city had a very high crime rate, flooding issues, all sorts of affordability issues, and a lot of people on Centrelink and on the dole. As an out of area investor, you might look at the average household incomes of one area plus the average sell price, which might be 500K. Then, look at the suburb next to it and look at the average incomes and the average sales price at $350,000, for example, where that represents value, it’s just a matter of time before it changes.
Unfortunately in Brisbane, like Sydney and Melbourne, there’s just some ghetto areas, which may change over time, but really only investors and people that can’t afford to buy anywhere else are buying into those areas. Be very careful, not all suburbs are created equal.
I really appreciate your time today and I hope you got something out of this video. It was great to talk about where the Brisbane property market is heading. As I said, I’m looking to accumulate property here myself at the moment and have been doing so for the last couple of years. I’m really excited about the potential in 2017-18 as we work towards the top of the next real estate cycle. Thank you so much for your time. Looking forward to continuing our conversation in the next video.