Starting with Capital Growth, what are the factors that drive property values?
Like most cities, the position and location of a property can really influence a properties value over time. With some areas prone to flooding, it is critical you check the government’s website before you start looking for a property to make sure the property has not been flood-affected or had issues with water as this will impact the future growth of your property.
Available supply and demand for location.
As with most assets, supply and demand is a major driver in values. When supply is high, there are more choices for buyers on the market and this can sometimes drive values down. When there is less supply but more demand, there are fewer properties available on the market causing higher demand and generally driving property values up. If you need a recap on supply and demand in the property market, you can listen to this podcast.
Availability of land and size of land.
Both buyers and renters in Brisbane are generally used to having larger yards and open spaces for pets, even in the inner city. It isn’t uncommon to see blocks of 400, 600 or 800 square meter properties within 4-5 km of the city selling for under $600,000.
Neighbourhood appeal and character of the building.
Brisbane is famous for the Queenslander, an iconic architecture mostly found in the state which is made primarily of timber and can be low or high set. A lot of the times the properties are set on stumps to allow ventilation through the property during the hot summers. Due to its iconic character, if you are buying a run down Queenslander, you need to know you may be limited in the changes you can make. Sometimes there are even restrictions on the external colour of the building! Do your due diligence to ensure you don’t get caught, and limit the marketability of your property in the future. If you need some tips on updating a Queenslander, check out our article on renovating a Queenslander or post-war home.
Proximity to higher income and employment.
The majority of work in Brisbane is operated out of the CBD. There are some satellites, being industrial areas around the edge of the city, that you can also look into, such as Chermside, Carindale, Helensvale etc.
Then looking at rental yield and market factors
Existing availability of vacant land and future availability for possible subdivisions to enter the market.
In established suburbs within 5-15km of the city, there is a very limited availability of land when compared to emerging areas. Upcoming suburbs have new land estates and more vacant land becoming available to buy which provides more supply, and can then cause a softening of prices.
Current availability of accommodation.
Similar to the supply and demand drivers of capital growth, rental yield can also be impacted by how many properties there are on the market. More properties on the market means tenants have more choices and therefore landlords experience pressure to reduce prices to compete. On the flip side, if there are fewer properties available and the same demand from tenants, there are fewer choices to rent and there is upwards pressure on rental prices pushing yields up.
Once you’ve found a good investment property, it’s important that you manage it well to ensure you’re maximising returns. Through Red & Co, you can leverage our expertise to get the best deal on your mortgage, get advice on negotiating a good sale price and having an experienced property manager look after your property and tenants. To chat with one of Red & Co’s expert advisors, call us on 1300 88 73 28 or email [email protected].