Brisbane tipped for growth but jury out on best location

With our poll yesterday seeing a majority of respondents believing Brisbane is the best capital city to be investing in currently, it’s the specific location that’s contentious.

Yesterday’s poll recorded 39% of votes pointing to Brisbane as the next best investment buying location, followed closely by Sydney at 22% and Melbourne at 11%.

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Propertyology’s Simon Pressley told Property Observer that he does expect Brisbane to outperform the growth in the rest of the market by about 4% overall.

He also said that he has only recently begun looking at the market again.

“It had been rare for us to be buying in Brisbane over the last couple of years and in the last couple of months we have actually started again,” Pressley said.

With a GFC and two floods having softened the Brisbane property market, it had been running at a lag on the rest of the market for some time, however now stock is being soaked up.

“What I have seen is that it has been frustrating because of falling stock on market and when we do find that needle in a haystack sometimes it already has an offer on it."

“We’ve seen those dynamics before and it means competition and often leads to some decent price growth.”

When looking in and around Brisbane for the best location, however, it’s a contentious topic.

Right Property Group’s Victor Kumar pointed to best buying in Logan, an area that has a stigma with the locals and that he sees as undervalued as a result.

With townhouses up for $180,000 receiving rent of $240 to $250 a week, or around 7% yield, Right Property Group has purchased between 45 and 50 properties for clients over this year.

“The very first thing when you’re buying in Logan is that it’s a street by street thing and you need to avoid the flood streets,” Kumar explained.

“The whole of Logan didn’t go under and it’s easy to see on the Council websites where the flood zones are.”

For this reason, insurance premiums can also be a little higher.

Pressley, however, warns against buying in Logan noting that the numbers may look attractive to interstate buyers but that the opportunities are not as they seem.

“Logan has copped a bit of airplay. I personally don’t invest there."

“It’s traditionally had higher unemployment than the national average of Queensland’s capital, a low socio-economic demographic and, historically, crime and those sorts of things. It’s a mortgage belt area and has a lot of attraction from a less sophisticated investor with the low-entry point, particularly with people that aren’t local to Brisbane,” he said.

He said that it mirrors the area out in Sydney’s western suburbs, and this is why he does not invest there.

However, Kumar said that this is exactly the reason that he has turned his attention to the area.

“It’s just like western Sydney. There’s huge tenant demand and it has a stigma to the locals that is fading. It will turn a full circle in five to seven years,” he said.

“We’re already seeing growth. There’s one really easy way to find out whether there’s a sudden spur of activity and it’s when agents start not returning your calls. October last year we could put any price on it and now we have to be more realistic.”

Asked why other investors in Brisbane might not see Logan in the same light, he said it was once again the stigma.

“There’s one simple reason for that. You can’t see the woods for the trees. If you’re there you’re not seeing the changes that are happening in the areas. We’re coming in from an outside perspective and we’re seeing the fundamentals without the stigma."

“The cause for the stigma is part of basic investing in terms of fundamentals; you want to invest in areas with stigma where the cause has long gone. This is an area where locals haven’t caught up and the price hasn’t either.”

Jennifer Duke

Jennifer Duke

Jennifer Duke was a property writer at Property Observer

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