The key to investing in the Brisbane Property Market
Investing in the Brisbane Property Market 2019 updated property guide covering Brisbane and the South East Queensland Region.
The key to investing in the Brisbane Property Market is to purchase a property as close to the Brisbane CBD as possible that is within your budget. Once you have determined your budget it is then a matter of identifying the suburbs where you can invest and where you can maximise your return. To do this you need to understand the property price cycle and where the price cycle is in relation to the suburb you are examining. This is where the skills of a very good local Brisbane Buyers Agent comes in.
Identifying Suburbs to invest in requires expert knowledge of the Brisbane Property Market. We need a suburb whose median house price is within our budget. We also want to identify a suburb whose value is set to increase in the near future. That is a suburb which is on or showing signs of moving up the property price cycle.
To do this we can either study the local market for many years and try to identify suburbs of opportunity or you employ someone like myself, Alistair Kelsall, who has been working in the Brisbane property market for 18 years and specialises in identifying areas of potential future high growth.
As an example, there is a suburb just South of Brisbane called Oxley, a very good suburb with access to Rail, shopping and major arterial roads. The Median House Price for a 4 bedroom property in Oxley is $608,000. The Median Rental Return for the same type of property is $515 per week. That equates to a return of 4.4%.
Oxley Median Price Historical Trend
The graph above clearly shows that Oxley has been on the upward side of the property price cycle and would be near its peak value. So if we purchase in this suburb, we cannot expect to make great gains in capital growth as it is near its peak and will now start to slow down or drop in value.
The Next Suburb
What we want to do is target the next nearest suburb that is under demand now yet shows clear evidence that demand will increase.
As suburbs increase in value, they become unaffordable for many people, yet the desire to locate in a particular area is very strong, so they look to the closest suburb.
Durack is a suburb of Brisbane that is located right next to Oxley, it is 16.5 kilometres to the Brisbane CBD with a median house price 0f $451,000 for a 4 bedroom home and a median rental return of $440 per week. This equates to a return of 5%, an additional 1/2 a percent than Oxley, a similar distance to the city and will become the suburb that people start to purchase in when they cannot afford Oxley.
Durack Median Price Historical Trend
The graph above clearly shows that Durack house prices have been fairly flat but if you know the area and understand it’s demographics and property types as I do, this is the suburb to buy in.
Durack Property Types
Durack is a suburb where you can purchase a very solid brick and tile home on around 600 m2 of land for under $450,000 and get a better return from your investment than a more expensive property very slightly closer to Brisbane.
It is also a suburb that is showing signs of increased demand because more people want to live close to Brisbane at a lower cost.
I have purchased several homes in this suburb for clients and have experienced a very low vacancy rate for many years and have had no issues from tenants
There are many other reasons I have highlighted Durack in this example and if you want to find out more then simply contact me, Alistair Kelsall on 0405 131 333.
The Trick to Investing in the Brisbane Property Market.
The Trick to Investing in the Brisbane Property Market is not to base your purchase on the price of a property. It’s all good finding a cheap home in Brisbane and thinking you are going to make a small fortune in capital growth but you could be in for a nasty surprise.
Right behind Durack are 2 suburbs that we do not invest in. it’s not the property there or the location, it’s the demographics, mainly your future tenants. Ipswich, long promoted to be a good investment option, there are so many new housing estates with very low prices that the rule of supply and demand has to be adhered too. Too many properties on the market, low demand, low returns, high vacancy rates.
The 2 Properties below represent extreme examples of the types of properties available to you in Durack.
The one of the right has is a dual key property on 1457 m2 of land and was purchased for $520K 2 years ago. It can be developed into 3 lots with no modifications required to the existing dwelling.
The property on the left is a very basic 3 bedroom brick and tile home on 600 m2 of land and was purchased for just under $300,000. It rents for $350 per week which is a return of 6%m and has never been vacant since the day we purchased it.
This is a true-life example of the Brisbane property market. You can have a highly desirable expensive suburb right next to a low priced suburb. But some of the cheap suburbs are cheap for a reason and some as in the case of Durack here are very good suburbs to invest in.
I have many other examples of this type of scenario in Brisbane, Ferny Hills is another great example, the media started advising people to invest there a couple of years ago. The effect of which was to place pressure on the local housing market stock which then increased the values. I would arrive at an open home to find 30 groups there.
So while Ferny Hills was experiencing a very fast increase in values, the suburb of Mitchelton, 4 kilometres closer to the Brisbane CBD, more infrastructure, more desirable, went through a decline in values due to the decreased demand.
During this phase I purchased 3 properties in Mitchelton, for less than what I could purchase a smaller property for in Ferny Hills and now that the market has corrected, the properties values in Ferny Hills has flattened whilst Mitchelton has increased significantly.
Consult a Local Brisbane Property Expert
To avoid the same situation as in the example above, engage a local Brisbane Buyers Agent like me, I take care of everything for you and my knowledge has been built up from over 18 years on the ground experience. Not one of my customers has purchased a property that has not performed. I work very closely with you so that you learn the market as well go and when the right property comes along for you, you will know it and feel 100% confident.