- 6-10% capital growth forecast over the next 12 months
- Work-from-home lifestyle has been a factor in internal migration
- Oversupply a risk for investors in some areas
6-10% capital growth over the next 12 months in south-east Queensland is expected thanks to strong demand for buyers attracted to the Queensland-lifestyle, according to Riskwise Property Research’s quarterly Risk and Opportunities Report.
The relative affordability of houses compared to Sydney and Melbourne, low interest rates and strong consumer sentiment are all factors that have incited buyers to the Sunshine State.
The co-founder of BuyersBuyer.com.au, Peter Wargent, said that sentiment amongst buyers has changed since the pandemic first had an impact early last year.
“We’re seeing plenty of buyers who put their searches on hold in 2020 suddenly rushing back to buy. Stock levels are very low and auction markets in particularly (sic) are very competitive,” said Mr Wargent.
Due to the increasing ability to work from home, internal migration has now become a major driver in the level of demand. In addition to this, Mt Wargent remarks more investors are on the hunt for quality investments in south-eastern Queensland.
“We’ve seen lots of buyers in Brisbane, Gold Coast, and Sunshine Coast who have recently relocated to south-east Queensland. Many appear to be choosing to work remotely or fear further lockdowns in the southern capitals,” Mr Wargent said.
“But the change this year has been that investors are coming back into the market, so there’s competition for quality property coming from all angles, and rental markets are tightening to the extent that it’s become cheaper to be a buyer from a renter, at least from a cashflow perspective.”
Doron Peleg, CEO of Riskwise Property Research, believes the recovery was similar to what the research house had predicted late last year.
“Historically there has been a strong correlation between movements in interest rates, investor activity, and property price growth, and as we forecast last year, the correlation will reassert itself this year leading to strong price growth for houses in Brisbane, the Sunshine Coast, and Gold Coast, especially for family-suitable properties” Mr Peleg said.
According to the report, an increasing number of high-quality houses in south-east Queensland have been sold at a premium after a relatively short time on the market.
However, it is noted that some mining towns in Queensland are experiencing lower demand with the risk being higher due to many investors having negative equity and lack of growth drivers, especially over the medium and long term.
As houses in Queensland are substantially preferred over units, investing in apartments and units in high supply areas carry both equity and cashflow risk, according to the report. This is in part due to some apartments being highly unsuitable for families.
Nevertheless, rentals in areas such as the Gold Coast are still in low supply.
“In some popular areas, such as parts of Noosa, there is effectively no vacant rental stock and the market is exceptionally tight. Vacancy rates are also tightening at Gold Coast and are falling in Brisbane. There’s no question that internal migration has been a big factor in this” Mr Wargent said.