Brisbane seems to be the buzzword in investment circles at the moment, but treating the city as one single market could be a costly mistake.
Brisbane City can be divided into three distinct regions. The inner, middle and outer rings are, for the purposes of this blog post, represented by five kilometres, 10 kilometres and 20 kilometres rings from the CBD respectively. Place Advisory has conducted a sales analysis of houses and apartments in each of these regions to see how the markets differ. We have also had a look at demographics and future trends to see how these regions may change in the future.
With a median sale price of $800,000 for the most recent six months to March 2015, the inner ring is the most expensive region to buy a house in Brisbane. Houses here are 25 per cent more expensive than those in the middle ring and a massive 58 per cent more expensive than outer ring houses.
Median price growth over the past 10 years has been similar across each Brisbane region. The inner ring experienced the highest level of growth at 5.7 per cent per annum over that period, while the middle and outer rings experienced median price growth of 5.2 per cent per annum and 4.5 per cent per annum respectively. Sales results of the past 12 months, however, have seen the inner ring clearly outperform. The median house price in this region increased by 4.6 per cent in the past year, while the middle and outer rings saw comparatively subdued levels of price growth at 1.6 per cent and 1.1 per cent respectively.
Brisbane’s outer ring consistently outperforms in terms of number of homes sold. Over the 12 months to March 2015, this region accounted for 52 per cent of total housing transactions. This is presumably due to the affordable price point and sheer supply of detached homes available. ABS data shows that 84 per cent of all dwellings are detached in the outer ring compared to 72 per cent in the middle ring and just 40 per cent in the inner ring. Housing supply is also increasing more rapidly in this region than in others. There were more than 1,500 approvals for new homes over the past 12 months, according to the ABS. This figure is substantially higher than in the other Brisbane regions. Over the same 12-month period, there were 757 new houses approved in the middle ring and 285 in the inner ring.
Like most Australian cities, Brisbane is CBD centric. This means that dwelling density generally increases as you get closer to the CBD. In the inner ring, 60 per cent of all dwellings are apartments according to the ABS. This is a significantly higher proportion than the middle and outer rings, where 28 per cent and 15 per cent of total dwellings are apartments respectively.
The inner ring is home to Brisbane’s most expensive apartments. Here, the median price for an apartment was $465,000 for the most recent six-month sales period ending March 2015, compared to $432,000 in the middle ring and $365,750 in the outer ring. Overall, median price growth has been subdued in the Brisbane apartment market in recent years. The middle ring has seen the largest median price increase over the past 12 months, registering a 2 per cent increase. Other regions saw median prices contract over this period.
The past 12 months have seen a decrease in the number of apartments sold across Brisbane. The most recent six-month period ending March 2015 saw a total of 3,733 apartments sold. This is 30 per cent lower than the corresponding period during 2014. It must be noted that off-the-plan contracts that have not settled are not included in this data. This generally affects recent sales results.
The majority of apartments are, unsurprisingly, sold within the inner ring. During the most recent six-month period ending March 2015, this region accounted for 53 per cent of total transactions. A further 30 per cent of apartments were sold in the middle ring and the remainder were sold in outer Brisbane.
Future trends: a changing city
Demographic trends and projections paint Brisbane as a city that is transitioning. The OESR predicts that both the inner and outer rings will account for a continually larger proportion of total population growth over time. Between the 2001 Census and the 2011 Census, the inner and middle rings both experienced population growth of approximately 50,000 people. Over the next 20 years, however, the inner ring will receive an extra 90,000 residents while the middle ring will grow by half of that figure. The outer ring’s population is expected to balloon by almost 150,000 people over that period. This change will be driven by the increasing popularity and practicality of high-density living in the inner city and, for the outer ring, the affordability and availability of greenfield land on Brisbane’s outskirts.
The purpose of this article was to highlight the overall characteristics of each region in Brisbane and although general trends have been established in this report, it is important to note that no two suburbs are the same. Indeed, no two properties are the same. For example, even though inner ring apartments have recently experienced greater median price growth, a well-designed, well-located apartment in the middle ring will likely outperform a poorly designed apartment in the inner ring. Each property must be judged on its fundamentals alone.
Lachlan Walker is head of the Place Advisory division at Place Projects, Brisbane’s premiere project marketing company. Lachlan is recognised as one of Queensland’s preeminent residential property market experts, specialising in South East Queensland residential property.
His role is to provide product specific advice to clients by gathering and applying internal and external market intelligence which is translated into meaningful market reports. He is widely published and is continually called upon to provide commentary on the residential market by various media and property journalists nationally.
Lachlan has extensive experience in property market research and has provided professional consultancy and advisory services to leading property clients including the likes of Leighton Properties, Lend Lease, Watpac, FKP, Brisbane Housing Company and Consolidated Properties.
Visit www.placeprojects.com.au for more information.