The uncertainty in the property market has been a hot topic of conversation over the last few weeks. As with all crises, when we are in the midst of it it is very difficult to focus on anything else. It would seem that property everywhere in Australia and around the world must go through a huge correction if we were to believe most market commentators. Many are forecasting months or even years of depressed markets, with most commentators highlighting how Sydney and Melbourne — and therefore, in their view, Brisbane as well — are in the worst position. However, as the old adage goes “sometimes you can not see the forest for the trees“. You need to have caution when listening to these generalistic and often unsubstantiated comments, as many are irrelevant to a genuine analysis of a specific property market.
Determining the true outlook of a property market is difficult at the best of times, and even more so during this COVID-19 pandemic. Sydney is being compared against Melbourne which is being compared against Brisbane, despite the fact that these are all very different markets. Property markets do not shift as one, and are in fact many markets within markets. The Brisbane market is a smaller market within the overall Australian property market, and even the Brisbane apartment market and then the inner city Brisbane apartment market are all effective sub-markets of each other. Given that property is an illiquid asset class and driven predominantly by owner-occupiers, these sub-markets can act very differently from other markets within the same country, and within the same state, and even within the same city. We only have to look at the boom-bust cycle Sydney and Melbourne property have experienced in the past 10 years and compare that to the flat performance of Brisbane to see an apt demonstration of this.
So is now a good time to buy property?
Research conducted by Property Investment Professionals of Australia (PIPA) chairman Peter Koulizos analysed annual median house price and index data for seven consecutive years, including the start of each recession or economic downturn from 1973 to the GFC. The data found that five years after each of the recessions or economic downturns over that time period, capital city house prices saw a significant increase.
“In fact, looking back over the past nearly 50 years, house prices were higher five years after a recession or downturn each time,” Mr Koulizos said.
While some areas outperform others, due to a variety of economic reasons including employment, Mr Koulizos stated that, overall, capital cities continued to grow: “The moral of the story is don’t panic. Property has shown its resilience through economic shocks before and we have no reason to expect it won’t do so again.”
Propertyology’s head of research, Simon Pressley, recently reaffirmed this, stating that the temporary disruption will pass, with investors and buyers alike likely to cash in on some strong opportunities.
“When we get out of our cocoons in a few months’ time, there’s going to be an enormous release of pent-up demand,” he said. “All the things we haven’t been able to do, we will be doing that stuff. That will stimulate the economy quickly, then we have the stimulus packages on top of that, we have credit supply with the gates being open, we have all-time record-low interest rates and we have property yields of 5%.”
If you include the early-access super scheme, some groups of buyers are in a better position now than they were before the pandemic. First home buyers, in particular, are in a great spot — particularly in states like Queensland, where an impending property boom before the crisis has meant that there are a number of great properties and projects that are now open to these buyers. Getting into the market before the predicted property boom is back will be a major driving factor for these buyers.
The key for the Brisbane market is the existing pent up demand that was driving the market prior to COVID-19. Most experienced property analysts consider this demand ‘paused’, not disappeared.
This means that if you’re planning to get into the market, the time is now. Many areas throughout Brisbane have been poised for growth for a while, and some buyers may find it more difficult to get into the areas they want after the boom begins. An example of an area set for quick growth is South Brisbane. The suburb has had fairly static apartment prices over the last five years, which indicates that once a boom begins, prices are likely to grow quickly. In a suburb that has few new projects planned, limited stock should help to drive these prices even higher. Major new developments nearby (like the Queen’s Wharf project and the new Cross River Rail) will further increase interest in the suburb (you can read more about the huge infrastructure boom that Brisbane is about to receive here). It’s easy to see how a confluence of factors will help drive up property prices in Brisbane in the near future.
The recent Herron Todd White (HTW) month in review report further highlighted the fact that Brisbane is in a strong position, particularly for first home buyers. For those who have secured their finance and are ready to purchase, some excellent options will come their way. HTW recommend sticking to well-known property ‘guidelines’: good quality, entry-level stock in prime inner-city locations will weather the storm the best; steer clear of properties in secondary locations or that are designed purely as investment product. If you are looking at units, larger and better quality apartments in good locations will fare better. Of course, if you can buy a home in a solid, near city location at around the median price point, then this would be the lowest risk option.
An inner-city project that hits all of these requirements is Atlas South Brisbane. Sitting on the opposite side of the Brisbane River to quickly growing areas like Queen’s Wharf, Atlas is in a great location for buyers who want to buy good quality apartments in a better location. With Southbank, the Brisbane Convention Centre and every type of public transport within walking distance (CityCats included), Atlas is ideal for those who want to be close to the action in Brisbane — something that is likely to become a major selling point in the next few years as the city grows. The one and two-bedroom apartments in Stage Two are now all complete, meaning buyers can move in as soon as they are ready to. Click the button below to learn more.