Brisbane Property Update August 2020
A lot has been happening in the Australian property market in the last few months. Today we wanted to speak specifically about the Brisbane market, where is it at, what’s the good suburbs and are there any good investments in that area?
0:00 – Introduction
0:32 – Quick catch up
1:03 – Ben’s recent Brisbane analysis
2:15 – Comparing the suburbs and finding the winners and losers
5:37 – The differences between the different areas of Brisbane
7:45 – North Brisbane vs South Brisbane
9:13 – Good suburbs vs bad suburbs
12:04 – Where is Brisbane at during its cycle?
15:37 – Covid infrastructure bailout program
16:25 – The Mid-Cycle slowdown
18:07 – Getting good long term stability
a lot’s been happening in the australian property market in the last few months obviously with the pandemic that’s gone down and everything like that today i wanted to speak with ben everingham buyer’s agent from pumped on property specifically about the brisbane market which is the market that him and his team specialize in they’ve just done a whole bunch of suburb research in that area so i thought i’ll get on the line with ben we’ll talk about brisbane where it’s at what’s sort of happening and give you guys an update so hey ben thanks for coming on today hey bro good to see you good to see you again too it’s been a while definitely man it’s exciting to catch up again yeah and so i love that you’re in your new office i’m also in my new office which is my van which i’ve been loving i’m actually parked on the beach i can see the water from here but no one can see it in the video but just know that i got amazing views right now that didn’t cost me heat i’m loving it man i feel the same way like this you did cost me a bit this is like a green velvet lens that i’ve always wanted with like a timber wall behind me but um i’m feeling fresh and loving it as well yeah and so okay so recently you guys did a massive suburb analysis of all of brisbane do you want to first talk through okay why did you do that give us like some touch points on what are some of the things that you looked at for the suburbs and like what are some of the insights that came out of that yes so i think it’s important as an investor myself to constantly review the bigger picture as well as the the micro picture um so we know that based on the long term growth of brisbane being 9.7 a year according to core logic for the last 50 years that it is a long term winner we know that a lot of people moving up here at the moment and will be after the virus is over as well and so i just wanted to wrap my head around it which i do about once every year to two years and i look at you know brisbane isn’t one market like there’s some suburbs in brisbane that you can buy for 200k there’s some suburbs in brisbane that you can buy for 2 million bucks and so you can easily get caught in that sydney melbourne brisbane trap which is it’s one area but in reality there’s east brisbane central brisbane south brisbane north brisbane and west brisbane and all of them have completely different stuff going on as you know yeah and so i know like previously you’ve kind of focused on like central brisbane north brisbane um but this time around you kind of looked at more suburbs what did you think about the suburbs as you started to look at them yeah so for me personally at this stage i’ve sort of not been looking too heavily into west brisbane just because there’s just so much land out there at the moment that could be developed over time so from this perspective we looked at north we looked at central and east brisbane and we looked at south and southeast brisbane and the way that we do that as a business to get our heads around it is through what we call a suburb profile so we looked at things like vacancy rates how much house prices have moved in the last 10 years three years 12 months what people are paying for places what they’re renting for what the average incomes look like what the average demographics look like the ages the school districts the transport the train stations the shopping centers and you know through this like 40 or 50 things that we look at for each suburb we also have indicators or key points that become either a yes for that indicator or a no and so from looking at like 100 odd suburbs we were able to immediately strike out about 60 of them and then from that going into further detail able to strike out a huge amount more so yeah i i love with suburb research it can be super overwhelming for a lot of people in order to do it because you don’t know what the data means but i’ve always seen that when you have a template that you go through and as you do it for multiple suburbs it becomes really clear to see which are the winners and which are the losers when you’ve got one suburb with super low vacancy rates for example and then one that’s really high then it’s like oh this is a clear winner you know so you can start to see that so what were some of the things that you saw that really struck out some of those suburbs um you know that’s a really good point because there are key winners and in each suburb there’s about seven indicators that are deal breakers for me so the first one was average annual price growth in 10 years and we know that brisbane’s cheaper to buy now than it was 10 to 12 years ago according to corelogic so every suburb ticked that box because they’re all super cheap right now the second one was average vacancy rate so i’m always looking for a suburb with below two percent i mean most of these suburbs were between two percent all the way down to half of one percent like the vacancy rates up here are really tight in some of these areas so we just struck out anything that was above two percent and kept everything below um then what we did is we looked at average household incomes in each suburb and effectively the higher the income the better but that is relevant relative to property prices so if a suburb’s got an average price for example of 600k you really want a higher income than 1500 bucks but if a suburb’s worth 300 grand for example an income of 1200 bucks might be completely acceptable so we looked at that and then the major indicator was looking at how many people rent in a suburb so for me you don’t want too many renters just because obviously there’s not enough people to put value into properties over time so we just drew a line in the sand that in some parts of the city that was below 20 in other parts of the city it was below 30 or 40 percent again you’ve got to look at the whole picture not just the one indicator yeah and so that cut out a bunch of summers you find like major differences between like south east central north like if people are thinking about oh maybe i’ll invest in brisbane is one area better than the other or like suited to different investors it’s completely suited to different investors so you know you and i’ll hopefully shoot another bid on this the single versus um the dual key or dual income stuff but what i found is that brisbane central or brisbane city obviously has the highest prices um the highest quality of homes the highest incomes but they also have the lowest rent and in that particular part of the city you know you can’t legally rent out a granny flat or a secondary dwelling at this stage so that’s a really good option if someone’s looking to buy and hold for the next 15 to 30 years ride the growth wave up with brisbane you know renovate for profit that sort of thing like if they’re looking for that real blue chip thing that they could have got in sydney or melbourne 15 years ago and really what we’re talking there is within 10ks of the cbd as the crow flies as a circle around the middle of the city yeah and we’ve talked in previous videos about crazy opportunities that exist in some of those suburbs where like renovation opportunities properties with city views and things like that where you can make improvements to them that can massively manufacture growth in those properties yeah i was talking to a couple of clients about that this week and um one of the options that we saw was in a suburb nine cases in the city in a really sought after locals area where you can buy a house for like 750k and knock it down rebuild like a beautiful hampton style northern beaches of sydney or eastern melbourne type home and then resell that for 1.5 1.6 million dollars like six or seven people have done that this year and let’s say it costs you 550k to build it there’s at least 200 grand of equity and an opportunity like that immediately that’s comparable in the market so again not everyone has that sort of money but some investors like to own a small number of bluetooth things rather than a high number of cash flow things yeah and how would you compare like north and south brisbane to each other yeah so what i noticed in terms of the major differences is north brisbane in the last three years has been on a pretty strong run as a result of the university being built and the train station opening up in the beach part of brisbane um a lot of speculation has gone into that area a lot of investors have come into that area because it’s ended up on the hot spotting list of things like hotspotting.com homely smart property investor etc and so people have moved into that space um so as a result of that the house prices on the north side comparable distance with comparable demographics would be at least 50 to 100 grand more expensive than the same distance from the south um i also noticed on the north side the incomes are a little bit lower per household on average and the vacancy rates are a little bit higher at this stage as well um and with the south side as i you know it’s the complete opposite of that vacancy rates are super low like most suburbs were below one percent really really good infrastructure you know what i’d always sort of turned a bit of a blind eye to the south side um just because the demographics in previous reviews weren’t as strong as they are now but incomes have really lifted and the gold coast beach i didn’t realize is only like 35 minutes drive for most of these suburbs too so we’ve started to have a look at that in a lot more detail there’s probably 15 16 suburbs that look really really interesting down there with really good demographics and school data as well and then in each of these areas or in any in particular did you find like there was a a couple of good suburbs but a lot of bad ones as well like in each of these areas where they’re good suburbs and bad suburbs you know for example there’s a suburb called newport in north brisbane right on the beach that’s worth on average six or seven hundred k with property selling up to two mil then there’s a suburb next to it called deception bay where you basically which is filled with housing commission and flooding issues and the same properties are selling for 400 grand now if you didn’t know the differences in brand you’d happily as an investor look into debate but when you start to overlay the things that we do like housing commission flooding demographic data there’s just not the same potential same on the south side like you could have like a suburb like woodridge for example 20 odd case in the city next to a beautiful suburb like daisy hill one of them is worth 250 grand the other one’s worth 500k but when you start to look at the demographics you can absolutely see with clarity the story before you actually start putting your money there so the biggest thing is to avoid the traps of the cheaper suburbs with really high percentages of renters and really low incomes and look at the bigger picture and go will value in sydney melbourne perth and brisbane has always in the future going up at a faster rate and cheaper average areas yeah and you’ve not just got to take into account the numbers but also the brands associated with areas too and that’s the thing like bondi is a brand for example and people want to live in bondai or in koji or in cronulla or whatever it is and looking at those areas when there are more owner occupiers instead of renters and occupiers are more likely to invest money into their property in order to improve it which is going to raise the value of it more owner occupiers are going to you know spend emotionally on properties versus investors who’ll be more monetary focused and renters can’t improve properties and especially if you’re in areas with a lot of housing commission generally they’re not taking care of as well and so the suburb might not necessarily see the same uplift as a suburb that is mainly owner occupiers where it is more desirable and you can completely see that like if you look at the growth in cronulla beach for example on the southern shore or mainly on the northern beaches of sydney versus somewhere like brighton pranala and manly because of that have just gone through the roof and you can see it in places like geelong in melbourne too like geelong as a the suburbs worth 8 900k and you’ve got suburbs directly next door worth 300 grand from a logical perspective you’re like what the hell is going on but then you start to look at it geelong’s got an average household income of 1600 bucks a week this suburb’s got an average income of 400 a week like there’s such key indicators that you can look for to make decisions before you waste all your time looking at something yeah so we’ve talked mostly about like the suburbs of brisbane obviously we’re not going to give out like oh this suburb is hot this suburb is great because by the time people listen to this months in the future it’s going to change yeah and it’s just going to mess people up but obviously you need to do your suburb research into those areas and we’ve talked a bit about how to do that and some things to look at we don’t have a crystal ball we don’t know how everything’s going to play out especially with this pandemic but can let’s finish this by talking a bit about the brisbane market at a hot as a whole where it’s at in its cycle how this pandemic could affect it because i know people have those questions and are wondering for sure so you know the key differences between brisbane sydney and melbourne because they’re the three markets that you and i both like and hopefully we’ll own property in all of them in the future um just at the right time so it’s kind of like um sydney and melvin have been on this team since the gfc where they were between 60 and 150 more per suburb than they were where brisbane has just been this like flat liner with a couple of pulses over 12 years where it’s really really affordable on average now some suburbs in brisbane have doubled since the gfc close to the city but like the suburb next to it might have only gone up by 15 or 10 percent over that same time and that’s what’s interesting to me about brisbane all of the boats have yet to rise and therefore there’s an opportunity um incomes in brisbane per household and now only seven or eight percent behind sydney and they’re actually higher per household than melbourne according to the abs more people moving to southeast queensland in terms of australians and any other part of the city and the feedback that i’m having is a lot of people have got disenchanted or i don’t what’s the word i’m trying to say there disinfectant disenchanted disenfranchised [Laughter] with sydney and melbourne through this epidemic and there’s a lot of people who have identified southeast queenslanders where they want to move especially now that they can figure out that they can do it remotely as well yeah and well that’s it i we always talked about southeast queensland being a like migration hotspot for australians so people who already live in australia who are already citizens are migrating away from other cities up towards you know brisbane gold coast sunshine coast but obviously inter international migration was going a lot to sydney and melbourne which this pandemic has obviously happened and so there’s not that international migration that there once was but i’m assuming that people will still be migrating up to brisbane to get away from you know stage four restrictions and things like that yeah i think um you know there’s plenty of people crossing the border still at the moment like if you look at the sunshine coast gold coast and brisbane vacancy rates they are the most chronically undersupplied they’ve been in 15 years i’ve got clients who have moved up here and they just cannot even get a rental so they’re having to move into motels like it’s interesting and so that’s a big one like what i’ve noticed through sqm’s research is that a lot of the vacancy rates in sydney and melbourne have spiked because there’s not the international students tourists as well as airbnb properties as well as all the development that was going on down there that was over supplying the market where brisbane’s vacancy rates spiked at first and now they’re on a trajectory back down with good suburbs having the most insanely low vacancy rates i’ve ever seen as an ambassador um you know that’s interesting to me like with southeast queensland long term projected to grab 25 of australia’s population job and income growth like that looks cool and i’m not sure if you’ve seen any of the information on what the government’s calling um the covert infrastructure bailout program insane amounts of money man that no one’s talking about but i think queensland’s grabbing 140 billion dollars worth of extra infrastructure on top of what was already planned pre-virus so what sort of infrastructure would that be do you know airports like upgrades hospital upgrades new schools new train stations metro lines if you look at the sunny coast they’re building like a light rail just insane amounts of stuff man like all of the roads getting upgraded before it comes so monster money and if you look at that in comparison to sydney and melbourne is getting the lion’s share which is kind of interesting as well but what generally happens from this stage of the cycle which is the mid-cycle slow down that ryan and i have been talking about for two years is i’ll link up to a video on that down below yeah like i just want everyone to know that like you know this is was bound to happen coronavirus or night but because of the coronavirus it’s going to be a bit deeper and a bit worse than it could have been but like um i lost my train of thought there man well it’s the mid cycle slow down so like what we’ve talked about in the past is that um at the beginning of the cycle sydney and melbourne seem to go gangbusters while brisbane kind of lags behind which we saw since the gfc and then we have like another mid-cycle down and then after the mid-cycle slow down that tends to be historically where brisbane has performed better and outperformed sydney and melbourne and obviously the past won’t necessarily repeat itself but that’s the trend that we’ve seen overlaying you know those sort of those sort of cycles with how brisbane has done compared to sydney and melbourne completely and to add to that like you know the way that we get out of this is through easy money is coming next i mean right now it’s still very difficult to access credit if you’re a developer or an investor but they’re already looking to ease a lot of the royal banking stuff in america trump has rolled back every single thing they put in place to protect um the american population after the gfc that obama put in and then on top of that we get lavish government spending on infrastructure which we can see everywhere in australia right now so it’s interesting like who knows what will happen and me and you look at this as a 15 to 30 year thing anyway but i’m not too interested in year on year it’s more the long term and for that i’m really confident well i think that’s it you and i tend to look at oh where can we make the most money in the next 12 months or 24 months or three years like we’re less looking at that it’s more like okay where can we get good long-term stability and growth and where are we going to be in a low-risk situation and because brisbane hasn’t gone through the massive runs that sydney and melbourne have had but have had consistent growth historically and have good economics behind it and good demographics and things like that we see a lot of risk opportunity there and a potential for long-term growth so no idea what’s going to happen in the next three months or the next 12 months with what’s happening with the pandemic like we can’t we can’t work out what that’s going to happen but because brisbane’s had less of a run-up you would assume and it may or may not happen but because that lesser run-up you assume it has less distance to fall if it does go down to me making it like a lower risk profile you know when i reviewed those hundred odd suburbs across these indicators i was looking at three-month performance 12-month performance three-year performance and tenure and there are some suburbs in brisbane the same as sydney and melbourne that have declined by three or four percent in the last 12 months that’s their average but a lot of the suburbs particularly in the city and the north have actually continued to increase in value through the virus so there was obviously the oh my god moment that every single one of us myself included went through but now that oh my god moment’s kind of over um you know we’re just lucky enough as an as an australian citizen to have such a government backing us through this right now with things like job keepers seeker infrastructure like freezing home loans these are things that we’re doing better than most countries in the world with and and that’s you know the rush of properties that was expected to come according to the cbd updates that i’m looking at just don’t look like they’re going to come because of the freezing of loans maybe for another six months because job keeper looks like it could be extended until march or it will be it’s just the government’s doing a lot to you know put its future government in debt but to protect us now yeah so it’s cool to see that there are still some good suburbs out there or ones that look good and obviously in brisbane as well which we’ve talked about in the past there is the opportunity for those single income properties that you can hold long term or dual income as well and to get a positive cash flow situation so you can see yourself through trouble time so there’s also cash flow play in brisbane because of the lower prices and higher rental yields that you don’t necessarily get in sydney or melbourne and we won’t go into detail on that because we’ve done it in previous videos but if you’re out there and you’re thinking okay i would like to invest in this market obviously it’s not for everyone it’s for people who can you know stomach this market who want to grab an opportunity who are financially able to do that and want to do that but if that’s you and you’re thinking okay i am interested in brisbane then ben and the team over at pumped on property do offer free strategy sessions so you can get on the phone to them talk about where you’re at where you want to be and you know what are kind of the steps to get you there and what kind of property investments could get you there and whether or not brisbane suits you that’s a free you know phone call free conversation that you can have with them go to on-property dot com dot eu forward slash strategy to book in your free property strategy session and then if you decide okay i want to work with this team you can hire pumped on property they can help you find a property on your behalf and to help you through that process or you can then take that information and go and implement it yourself which a lot of people have done so again go to on-property dot condo you force our strategy to check that out thanks so much for this update ben i know it’s gonna ease a lot of people’s minds um you know and help people see that okay yeah there’s opportunities out there if you’re willing to do your research and understand which are the best suburbs so thanks so much for tuning in everyone and until next time stay positive