PROPERTY

Why Brisbane property is replacing Sydney as the investing hot spot

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There are two key reasons behind the increasing appeal of Brisbane property - affordability and the potential for attractive yields.

At the moment, our two biggest property markets, Sydney and Melbourne, are clearly closing in on the tops of their current upswing cycles.

So investors are looking for alternative locations, where they hope they can get in before the market starts to move.

brisbane property

PIPA's 2016 Investor Sentiment Survey has found that the majority of property investors are looking to Brisbane as the next property hotspot, despite some underperformance in recent months.

Our survey of more than 1000 property investors, which took place over August, found that 50% of property investors believe Brisbane currently offers the best investment prospects. It was the second year in a row that Brisbane came out on top. The number has fallen slightly though - from 58% to 50% over the past year - but it still remains far ahead of any other capital cities.

What made their prediction even more interesting was that 47% of those surveyed have more than two investment properties already, so they certainly aren't beginners tipping Brisbane as the next area to see growth.

Brisbane property values have become, comparatively, very affordable, with the median Brisbane house value now approximately $530,000 lower than Sydney's and $230,000 lower than Melbourne's (REIA Real Estate Market Facts June Quarter 2016). This is a significant difference that offers many investors an ideal leg into the market or more affordable way to grow their portfolio.

Brisbane is in the mid part of its upswing cycle and continues to deliver strong yields. According to CoreLogic's Housing Market and Economic Updates September 2016, the gross rental yields averaged 4.2% in Brisbane over the past 12 months, markedly higher than Sydney (3%) and Melbourne (2.9%).

But if you're investing in Brisbane you still need to be selective in terms of the location and type of property you're considering.

Savvy investors should remain particularly cautious when it comes to Brisbane apartments. Apartment development approvals are now at record highs and an oversupply event in Brisbane, especially in the inner city area, is probable. BIS Shrapnel's latest market brief reveals that rental apartments in the inner Brisbane area are experiencing a rise in rental vacancies - now 3.8% compared to Sydney (1.7%) and Melbourne (around 2%).

Investors looking to Brisbane will need to do their due diligence and ensure they are investing in locations with strong long-term fundamentals - not just an affordable price tag. And as we always recommend at PIPA, seek out qualified property investment advice, to ensure you're making a wise investment decision.

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Ben Kingsley is partner of specialist property investment advisory firm Empower Wealth and co-author of The Armchair Guide to Property Investing. He co-hosts The Property Couch podcast, and is chair of Property Investment Professionals of Australia.
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