Statistical Property Market Profile

Propertyology has conducted a study of the historical property market performance of each of Australia’s 550 local government authorities (LGAs) over a 15 year period; from 2000 – 2015.

The average annual growth rate of each LGA over the 15 years was then added with its corresponding rental yield, to calculate a total return. In ranking of best to worst performed, Brisbane City Council was placed 187th (in the top 34%).

Information courtesy of Propertyology’s extensive research collateral.

While Sydney and, to a lesser extent, Melbourne, have produced solid property price growth post-GFC, Brisbane is amongst the bunch of the other six capital cities which have seen property prices largely stagnate. After declines in median house prices of 5.1% in 2011 and 1.3% in 2012 (larger in various parts of Brisbane), Brisbane produced modest growth in each of the subsequent years (3.3%, 4.0% and 4.3%).

Economic Profile

According to the ABS (Census 2011), 9.9% of Australia’s total workforce is in Greater-Brisbane. Out of metropolitan Brisbane’s workforce of 540,389 people, 59,771 were employed in the white-collar sector – “professional, scientific and technical” (representing 11.1% of Brisbane’s total workforce, which is significantly higher than the 7.3% national average).

SGS Economics & Planning analysed the economic performance of 2015-16:

• In 2015-16 Brisbane’s GDP was $157.9 billion and represented 9.5% of national GDP.
• Brisbane contributed 4.0% of GDP growth.
• Brisbane’s 1.1% GDP growth rate was the lowest since 2010-11.
• Brisbane’s GDP per capita fell by 0.5% to $67,300, which was the third time in the last eight years that GDP per capita has contracted.
• The largest contributors to Brisbane’s growth was Public Administration and Real Estate Services (both 0.4 percentage points). Significant drags on the Brisbane economy included Professional Services (-0.3 percentage points) and Mining (-0.3 percentage points).
• Regional Queensland’s GDP grew by 2.8%, more than half of which came from increased mining production.

It should not be underestimated that a number of these professionals would be CBD jobs directly in the mining industry. Central Queensland contains one of the world’s largest reserves of coal and gas and, while Brisbane is not the coal-face, the mining industry is very important to Brisbane’s economy. Brisbane’s Lord Mayor once told Propertyology in a face-to-face meeting that for every mining job at the coal-face, there are nine directly related jobs in Brisbane’s CBD.

On the surface, Greater-Brisbane’s unemployment rate of 4.9% [June 2016] looks very favourable compared to national and state averages of 5.8% and 6.3%, respectively. But, here’s the thing: a decline in Brisbane’s unemployment rate from 7.4% in February 2014, to the current 4.9% is totally at odds with the lack of confidence demonstrated by Brisbane business owners. Where are all of these jobs that the Queensland state government continues to refer to in press release after press release since coming into office in January 2014?

A close examination of the detail behind the employment data clearly illustrates that the economic reality is different to the broad-brush unemployment rate. According to official ABS data, the 46,921 extra jobs created in Queensland during the period February 2014 to May 2016, represents 9.1% of the 517,333 jobs created nationally. Given that Queensland represents 20.3% of Australia’s total population, I’d say that Queenslanders have been batting well below their weight!

Of the 46,921 extra jobs created, public administration, health and education sectors have collectively increased by 51,622. Now, one can’t help but wonder why, with a significantly smaller population than New South Wales and Victoria, Queensland would add more jobs in the Public Administration sector (8,838 additional taxpayer-funded government jobs) than any other state.

Might we add, 16 out of 19 industry sectors collectively LOST 4,701 jobs during the period.

The 25,300 jobs lost in Queensland’s mining industry will include plenty of white-collar jobs in Brisbane’s CBD where, according to Property Council of Australia, commercial office vacancy rates rose to 16.9% in August 2016.

The most compelling statistic, however, is the 22,167 jobs that have been lost in Queensland’s Retail Trade sector. Job numbers in this sector have increased in every Australian state, except Queensland. New South Wales and Victoria’s impressive volume of job growth in Retail Trade reflects the confidence shown at auctions and open homes. On the other hand, property sales volumes in Brisbane City Council declined from an already modest level over the last 12 months (2.8% fewer house sales and 17.2% fewer apartment sales).

Some good news for the economy is the significant increase in coal prices since June 2016. Announcements of several new projects in Central Queensland will indirectly benefit Brisbane’s economy.

Population Trend

Queensland is the most decentralised mainland state in Australia – less than half of the state’s population reside in Greater-Brisbane.

Brisbane’s population growth rate has come down from the dizzy heights which it consistently produced throughout the noughties. The average annual population growth rate between 2010 and 2015 was 1.6%, just above the national average of 1.5%.

Driven by both overseas and interstate migration for a sustained period of time, Queensland’s population growth was once the envy of all states, consistently growing in excess of 20,000 people every quarter. Over the last few years, the rate of growth has eased. Interstate migration demonstrated a positive rebound throughout 2013 and 2014 – however, this was not sustained in 2015.

According to the Australian Bureau of Statistics, population rates in Australia’s third biggest city is forecast to “increase from 2.2 million at 30 June 2012 to between 3.8 million and 5.6 million in 2061”.

Future Housing Demand

According to CoreLogic, the median house and apartment price of Brisbane LGA as at August 2016 was $640,000 and $435,000, respectively. Relative to other capital cities, Brisbane certainly has affordability on its side when it comes to housing demand.

Queensland State Treasury expects population growth in metropolitan Brisbane to continue to be very strong, forecasting average annual growth 1.1% per year between 2011 and 2036. Investors would be wise to not underestimate the significance of the Asian Century and the economic development opportunities which will be created in Australia for decades to come. Brisbane is extremely well-placed.

Known major infrastructure projects planned for Brisbane include a $3.8 billion upgrade of Brisbane airport by 2025. A new runway is already under construction to increase capacity to 48 million passengers by 2034. The airport precinct is expected to employ 51,500 people by then.

A $1.1 billion health precinct has been approved at Herston, adjacent to Brisbane’s largest hospital. Construction will commence in 2017 for an anticipated 2027 completion and 1,300 full-time jobs.

The state government and federal government have agreed (in principle) to an underground passenger rail project to ease congestion in Brisbane’s inner city. The proposed Brisbane Cross River Rail Project is expected to cost in excess of $5 billion, and potentially employ as many as 8,000 people during construction.

Echo Entertainment leads a consortium who was awarded the contract to develop the $3 billion Queens Wharf entertainment precinct in Brisbane’s CBD. Spread across five blocks, the project will include a world-class casino, hotels, restaurants, and luxury apartments. This will be a potential game-changer for Brisbane, with 3,000 jobs set to be created once construction commences in 2017, and as many as 11,500 full-time jobs once completed in 2022.

Housing Supply

As at 2011 Census, there were 426,827 existing residential dwellings in metropolitan Brisbane and 821,059 across Greater-Brisbane.

In spite of the distinct easing in population growth (housing demand), the rates of new housing supply have gone in the other direction, scaling record levels.

During the four years ending June 2010, Brisbane’s population increased by 85,313, thereby creating demand for an additional 32,809 dwellings (Brisbane has 2.6 people per household according to 2011 Census). 28,409 new dwellings were approved.

Contrast this to the most recent three years, when additional housing demand was 17,285 (based on population growth of 51,804), yet a staggering 47,977 new dwellings were approved.

84% of approvals over the last three years were for attached dwellings (predominantly apartments). A very large majority of these are located within Brisbane’s inner 3-kilometre ring.

Queensland’s third biggest employment sector – the 223,000 people construction industry – lost 8,095 jobs between February 2014 and May 2016.

Recent Property Market Trends

Brisbane has a long history of being regarded as one of Australia’s star property markets. In anticipation of an improving economy, Propertyology’s own buyer’s agents increased their buying activity in Brisbane during 2013 (here’s a sample of what we’ve purchased). Our optimism quickly changed. In 2014 and 2015, most property pundits repeatedly predicted that Brisbane’s property market would follow in the footsteps of Sydney and Melbourne; often referring to a ‘knock-on effect’ in their so-called ‘research’. Propertyology, however, downgraded its outlook for Brisbane in early 2014, when the new state government abandoned the former government’s new infrastructure plans. Propertyology forecast that Brisbane was likely to see only modest price growth unless something significant occurred to help turnaround Queensland’s disappointing economic performance. Median property values subsequently increased in Brisbane by 4% (2014) and 4.3% (2015), well below Sydney (15.1% and 15.1%) and Melbourne (9.1% and 12.7%).

The low-performing economy is why Brisbane’s property market hasn’t found its way out of first gear. Yes, Brisbane is more affordable than Sydney and Melbourne, but so is every other location in Australia. The biggest difference between Brisbane and its southern rivals has been the lack of confidence and sufficient job creation to get both the cash registers ringing and people migrating back across the border.

Brisbane does have potential, however, modest growth is the best-case scenario until these core economic fundamentals are addressed. We anticipate ‘infrastructure projects’ to dominate discussion in the lead up to the next Queensland state election.

Disclaimer: Statistics in this report have been obtained from reputable authorities including (but not limited to) ABS, Census, other government sources, and CoreLogic. Commentary in this report has been prepared using information from a wide range of sources including (but not limited to) industry stakeholders, government bodies, community sources, and Propertyology’s own insights. While Propertyology has taken care to ensure that statistics and other general information in this report are accurate, no guarantee is given in relation to accuracy. Economies and property markets are unpredictable; no one can predict the future. This report is general in nature and should by no means be relied upon in isolation to make personal financial decisions. It is recommended that consumers obtain independent advice from suitably qualified professionals whom have considered your personal circumstances.