You may think that this is a silly question considering that Victorians and Sydneysiders are coming up to South East Queensland in droves and snapping up property. The First Home Owner Grant has also taken most of the available house and land stock off the market. I have not seen property move this quickly in the last decade or more.
But what does the data say? First Home Owner Grants and a locked down State can drive the demand but is it sustainable?
By 2041, South East Queensland is expected to accommodate an additional 1.98 million people, bringing its total population to 5.35 million This growth will require more than 30,000 new dwellings each year as well as more transport, jobs and services and if you consider that the average population growth over the last 10 years has been 65,000 pa then the region must meet these growth figures or we have a serious shortage.
Add on the unanticipated high demand from Victoria and Sydney and we may not have met the required build quota for last year.
Suburbs are showing vacancy rates well below the 3.5% industry acceptance with many at 0.5% or lower. I have met so many people in the last 6 months who cannot find a rental property, the queues are too long to even get an inspection.
Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist at AMP, has recently published positive figures for the Australian property market. His analysis shows that despite a reversal of 2.8% in the middle of last year, prices in capital cities are going up. Average Australian property prices will rise 5-10% in 2021/22 due to low interest rates and economic recovery incentives.
He expects house and land and townhouses to be the best performers and that small cities and regional property will see price rises catching up with major cites and regions. However, he also believes these factors may have less effect in the next 3-5 years, meaning this bull market may not last.
The ratio of Australian house prices to incomes and rent are some of the highest in the world. Australian income to house price is 5.9 times, Melbourne 9.5% and Sydney 11 times. This is very high when compared to 3.6 in the USA and 4.5 times for the UK. Interest rates are very low and there has been too much speculation about how long this will last – we still have low rates.
How does this bode for South East Queensland? SEQ has kept property prices much lower. A 4 bed, 2 bath, 2 car home in Mount Waverley, 30 minutes from Melbourne will cost around $950,000. A 4 bed, 2 bath, 2 car house and land package in Logan Reserve, 35 minutes from Brisbane City costs $471,000. Income to house price is much lower in SEQ, which will give the region a lot more lee-way when it comes to the rest of the Australian property market.
Property is a long term investment and if you have the right strategy that pays off your mortgage quickly and maximises the tax benefits and depreciation on a new home, then you have a passive income for life.
The property market in South East Queensland has all the right data to make it one of the top investment opportunities in Australia. Low prices, high rent and high demand when compared to many major cities and regions give it a big edge.