We recently assisted Thao and Chau, two lovely clients who live and work in the UK, secure this property in a location that before contacting us, they had given absolutely not thought to.
As with quite a few of our clients, Thao and Chau contacted us because they were “looking at investing into Brisbane property”.
From afar, they had done a lot of reading and the general consensus (especially throughout 2014 and even into early and mid 2015) was the Brisbane market was to be the next ‘hotspot’.
But what are ‘hotspots’? And most importantly – what or who creates them?
Most ‘expert’ claims of the next big hotspot generally ends up being completely underwhelming at best. Genuine ‘booms’ only come around once in a while – most recently Sydney 2013 and 2014. But before you get carried away, Sydney was actually the worst performing capital city from 2000 to 2014. That’s not a typo – you could have invested in any other capital city in Australia back in 2000 and your money would have worked harder for you, than had you invested in Sydney. This was predominantly thanks to a long period of very little growth from 2002 to 2009.
So, the underlying fundamentals of the Brisbane economy haven’t significantly changed; the Queensland political scene is more uncertain now and overall business and consumer confidence certainly isn’t significantly higher than it was a couple of years ago – what has driven Brisbane to be the next ‘hotspot’???
Often, a hotspot is created as simply as;
- A property data company makes an observation of a possible new trend evolving and mentions this on their website, in a newsletter or a press release (something as simple as median house values reaching $1M in Sydney)
- Journalists pounce on the opportunity to use this information to fill their weekly quota of ‘news stories’ (think about the number of articles you have read “Investors turning to Brisbane given unaffordable nature of Sydney and Melbourne”). These articles are read by millions of people.
- A handful property investment operators start seeing Brisbane pop up in their news feed. They then start pushing out marketing material with generic stats like population growth rates ,make mention of some features and benefits like ‘public transport’ and ‘urban renewal’ and presto, they have created a ‘hotspot’ report of their own on the subject location. For companies with a vested interest in ‘promoting’ property in a particular location, glossy reports and brochures are bread and butter for their marketing department!
Before long, we have a consensus – it’s a hotspot! Even though no-one has done any real ‘research’.
Brisbane is a prime example of this. As mentioned earlier, the underlying fundamentals of the Brisbane economy haven’t changed over the last couple of years.
The only thing ‘booming’ in Brisbane is the construction industry. Supply is rapidly on the increase.
Recent increased buyer activity (predominantly interstate investors) has seen some price growth in Brisbane however, rental yields are decreasing as vacancy rates and vacancy periods increase.
Without appointing PROPERTYOLOGY, Thao and Chau would have been part of this ‘movement’. Whilst purchasing a property in Brisbane isn’t the worst long term decision they could have made, we are confident that looking back in a few years, evidence will show that by keeping an open mind, Thao and Chau will have made a very astute investment decision by not purchasing in Brisbane.
For the record, PROPERTYOLOGY is based in Brisbane. All of our staff live and work in Brisbane. However, less than 10% of the properties we purchased for our clients in 2015 were in Brisbane and we expect it will be even less this year.
We have absolutely no vested interest in any location around Australia. We are simply researching property markets to ensure our clients best interests are always #1!
Congratulations again Thao and Chau – it was a pleasure helping you through this process.