Australian housing affordability has become a popular and highly speculative discussion topic recently, with housing prices in most Australian capitals soaring over the last couple of years. In particular, Sydney house prices have increased by 70% in the last 5 years. Melbourne is not too far behind with a 40% price growth in the same period.
A variety of factors suggest that this level of growth is unsustainable in the long-term and Sydney has hit a ceiling. Such high prices have locked out a large proportion of property buyers and investors, and many are predicting high levels of interstate migration to South-East Queensland over the next few years.
Brisbane has become an attractive alternative to Sydney and Melbourne, not only for investment opportunities but also to live in due to its comparative affordability. This puts South-East Queensland in a great position to benefit from the wealth transfer from the southern states, with Macquarie estimating a wealth transfer of $8.1billion over the next 3 years.
Red & Co are already seeing evidence of investors looking interstate to diversify their portfolios. Residential Sales Director Anthony Oddo has sold 3 apartments to interstate investors in the past 6 months, all who live in Sydney and two who never even inspected the properties in person. Two of these apartments were in the same complex which were also leased by the Red & Co rentals team at competitive yields prior to the sales. Compared to the same period two years ago where Anthony and his previous agency sold no apartments to interstate investors.
Anthony believes “investors are becoming increasingly aware of the great value for money in Brisbane and the potential it has for future growth. In Brisbane, you can pick up a good apartment in a popular suburb only 5km from the city for about $450K where in Sydney a similar apartment 5km from the city will cost more than double that. I’m not only seeing interest from interstate investors taking aim at Brisbane but also from interstate owner-occupiers who are relocating to Brisbane for its amazing lifestyle and affordability.”
Further to this, the Red & Co rentals team currently have 42 interstate landlords, which makes up a quarter of all the owners on the books.
The migration to South-East Queensland will absorb the so-called “oversupply” in Brisbane and have a positive impact on Queensland’s property market overall.