2019: what happened to Brisbane real estate?!
We often liken property ownership to small business and as 2019 draws to a close it’s worth reviewing your investment’s returns this year. There’s been lot of changes in 2019 with your competition, your customers, financial returns, and the risks you face being in this sometimes unrewarding role of property owner. And what might it tell us about the year ahead for Brisbane real estate?!
The tsunami of new supply has well and truly passed and been absorbed, so landlords are enjoying a far more balanced market. In the September quarter for example, we saw just 18 extra rental homes added to supply across the wider city. In the same period of 2017 it grew 3,350! It’s no surprise the latest Brisbane vacancy rates sit at well under 2% and the lowest in more than a decade. One emerging trend for 2020: many landlords renting their properties on short stay tenancies are watching their returns drop as that market has been badly oversupplied. These properties will come back to the long term/permanent rental pool.
Tenants are staying put, with the average tenancy growing longer. Tenants renting through Bees Nees now stay an average 22 months. There’s usually no rent saving to entice them to move. And the recent downturn showed even more landlords (and their agents) the value of keeping good tenants, so they’re responding faster to maintenance and working harder to offer service. Our major tenant survey also showed the surge in new apartments has changed their expectations of presentation. Homes with tired old kitchens and grubby paintwork are getting harder to rent. Our survey again confirmed the things tenants will pay more to have, with the un-sexy demands for carparking and storage topping the list!
The way we reach your prospective tenants and buyers has evolved even faster this year, with technology changing real estate marketing at rapid pace. Our agency now does 360 virtual tours of every sale and rental listing and we’ve introduced 24/7 responses and online booking for all customers. Our landlords and sellers need this competitive edge as the market demands better service than ever.
Your financial returns
A new report out this week: “The October and November results from CoreLogic show the Brisbane housing market to be gathering some pace, with values up 1.6% in total over the most recent two months.” Overall Brisbane home prices are still down on 2018 though our sales team are witnessing some strong buyer action in pockets. Bees Nees Sales Manager Rebecca Herbst says, “At the end of last year and the start of this year we were seeing one bedroom apartments in the 4101 postcode selling between $330,000 to $350,000. In the tail half of the year we are seeing sales prices range from $355,000 to $390,000.”
Rents are up with record highs set this year and our property managers are achieving rent increases in the vast majority of lease renewals. The champagne corks are hardly popping though, as we’re only a handful of dollars up from median rents of 2016. It’s been a long wait for landlords.
Interest rates continue to break record lows and the authorities finally lowered some lending hurdles this year, making it easier and cheaper to borrow money. In fact it’s now helped make Brisbane housing its most affordable in 15 years.
The broader market
Despite government incentives and more targeted medium density offerings, Brisbane’s empty nesters are still sticking to their big, old homes. One option has just got harder for them: we got a new Lord Mayor this year and his early announcement of a townhouse ban from many inner-city areas has drawn criticism. Meanwhile our first home buyers will have financial incentives from all 3 levels of government at the end of this month, so that’s a part of the market that can only get busier in 2020.
Generally though, Brisbane’s been a positive place to be this year, especially with the clear progress of major infrastructure. There’s now furious work underway for the $5.4b Cross River Rail, a 6km subway that, together with the recently commenced $1b Metro high-frequency buses, will transform inner-Brisbane’s transport options. Meanwhile we now have Queensland’s largest basement at Queen’s Wharf, as the buildings rise from the earth in this $3.6b entertainment, shopping and tourism resort that will cover 10% of our CBD’s land area. These hugely visible projects have given Brisbanites a greater sense of confidence in our future.
And the risks…
This time last year we suggested life was getting harder for Brisbane landlords and, while we dodged a negative gearing/CGT bullet with the federal election result, the current round of rental reforms from the Queensland government will be a disaster for landlords. Fundamental ownership rights are at risk and there’s already evidence investors will opt out of the market if these changes to tenancy law are put through.
Meantime developers sit ready to launch approved projects into the market and the recent surge in southern home prices has again led to increased activity from interstate buyers. There’s always a risk the market could over-supply again. For the time being there’s a busy Brisbane real estate market and many buyers are now actually frustrated by the lack of available listings!
Finally – thank you for reading in 2019. The Bees Nees Realty team have loved bringing you the latest on the market and emerging trends, helping you stay informed with your property ownership. It was a big year for us too with our team awarded the REIQ’s Agency of the Year (medium). We’d love the opportunity to work for you with the sale or management of your Brisbane property in 2020. We’re looking forward to a (mostly!) positive year for property owners!
Please share your views on the Brisbane real estate market, now and into 2020. Here’s your chance to make a public prediction for the year ahead!