Well, after being in the thick of Melbourne and Sydney for most of the past 2 weeks, assessing what is really happening on the ground (plus playing a bit of golf) I am glad to be back in Brisbane where those who understand property are very bumper about the next 2-3 years.
I have attached the Valuer-General’s report on land value movements over mostly the past 2 years with some interesting highlights being Logan and Ipswich with land increasing by roughly 11% and 8% respectively.
I keep hearing about the ‘Falling Australian Property Market’, which is partly true in some parts of Melbourne and for much of Sydney which is no surprise considering Sydney grew by around 83% over a 5 year period.
So, Sydney has settled back about 14% overall (with $2m plus values falling over 20% and under $1m properties generally under 10%) and talking to some people in the market I trust, we can expect more softening over the next 12-18 months with a rebound expected as the ‘Tide that lifts all ships’ stops rocking the boats and we settle in for a pre-boom phase around 2023 -ish.Put this dart board on your wall and we will either have a knowing smile in 5 years or a roaring laugh. The facts are, no-body really knows but based on history, trends and economic expectations, this dart board is as good as any. Certainly a LOT closer to the doomsayers who can’t help but be given air time by certain ticking media I’d rather not mention.
Oh, Melbourne? Melbourne is fine. We are seeing some softening especially in the higher end but the lower value properties have hardly moved either way in the past 18 months. Melbourne is strong and will always be strong in my book. It is just a matter of being clever when you buy there and what you add to your portfolio.
As you can see by the Valuer General’s report, Qld has enjoyed good growthin much of the state with some exceptions being areas hit by drought and coal and gas corrections.
Cairns is ticking over nicely due to heavy expenditure on Tourism, the Sunny Coast has some positives due to Tourism and some nice infrastructure expenditure and Brisbane is healthy overall with some of my recent favourite areas such as Redlands, Logan and Ipswich doing well in pockets.
I remind my clients of the quote in my book from Warren Buffett, “Be fearful when all other are fearless and be fearless when all others are fearful”. NOW is the time to pick up good value property in and around Brisbane as we see massive infrastructure spending and heavy interstate migration chugg along. With common yields of 5% compared to Melbourne around 3%, any Tom Dick or Harry can find cash flow positive properties so what do you think we can do if we are strategic and nut out something REALLY clever? We are finding yields of 6.5% to 7% on dual income properties as some who are worried about bank behaviour and potential political changes lock in and secure their cash flow.
So, if you see chicken little out there, re-assure him that neither the sky nor Brisbane property prices are likely to fall anytime soon.
Keep smiling and happy investing