Real Estate Market Predictions 2014: Buy in South-East Queensland

John McGrath

Real Estate Expert

After a phenomenal Spring season in Sydney last year, I’m expecting another good year for Sydney but the strongest market over the next three years is likely to be South-East Queensland.

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Sydney finished the year with a 15.2% increase in house prices and an 11.6% jump in apartment prices, according to figures released by RP Data. That’s great growth creating significant new equity for home owners across the city – and possibly opening the door for more investment activity if people choose to leverage that new equity now.

I think Sydney will have a strong Autumn as the Spring momentum carries over to 2014, but I’m not expecting the same intensity of demand for the entire year. My guess is 5-10% growth in prices this year but certain market segments will, of course, perform better than others.

Last year, the strongest segment in Sydney was inner city and beachside markets between $750,000 and $2M.  The growth was a result of several factors including the recovery of the Australian share market, record low mortgage rates, investment activity and a surge of demand from Chinese buyers seeking quality residential property. These same elements will be at play in 2014 and lifestyle markets close to the city and beaches will continue to benefit.

Currently, Australia’s biggest broker, AFG is selling almost 1 in 2 new loans in NSW to investors. The long term average is around 20 to 30%.  I think investor interest will remain strong in 2014, largely driven by an increasing trend in buying through self-managed super funds.

Whilst Sydney’s luxury sector above $3M did not enjoy quite the same strength as the middle ranges, it is now set for good growth.  The share market is improving, people in the financial services industries are getting better bonuses and business confidence is increasing.

Many properties traded at the upper end are owned, sold and bought by people in the financial services industries, so there is a direct link between an improving share market and economy and upper end property. Coupled with this, interest from overseas is not about to slow down, especially if the dollar continues to fall as that makes Australian property much cheaper for them.

The market I am really excited about is South-East Queensland.  Prices in Brisbane and the Gold Coast are still below pre-GFC levels, while Sydney is about 10% above now, so there is a greater likelihood of better capital growth in the Sunshine State over the next few years.

The median house price in Brisbane is so much cheaper than Sydney and eventually people are going to start taking advantage of that, either by moving there or investing there.  Currently, the median house price in Brisbane is $470,000 whereas Sydney is $775,000. Brisbane’s median apartment price is $383,000 compared to $557,000 in Sydney.

We saw some promising indications in 2013, with Brisbane house prices up 5.3% and apartment prices up 3.5%.  RP Data also provides joint Brisbane-Gold Coast data showing a 4.9% growth in house prices and 2% in apartments.  In short, we ain’t seen nothing yet! We’re just at the beginning of the recovery.

This year will be another exciting one in real estate. By Christmas, I’m very confident you’ll be reading about the great growth achieved in 2014 and feeling very glad that you bought this year.

Image Credit: discoverqueensland.com.au

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