Affordability is South East Queensland’s drawcard: John McGrath

South East Queensland’s affordability is attracting record levels of interstate migration along with investors and first home buyers, says property expert John McGrath in his Switzer blog.

The housing market continues to produce solid results despite a sluggish economy, said the recently released McGrath Report 2018.

Brisbane’s median house price increased by 3.0% to $520,000 in the 12 months to June 2017, CoreLogic data shows. The apartment market was a different story, with its median price falling 2.4% to $410,000, reflecting the inner city oversupply.

But Brisbane’s housing affordability compared to Sydney and Melbourne is its main calling card for home owners, investors and first home buyers alike.

“A significant price gap between the cities will underpin rising demand over the next few years,” writes McGrath.

Queensland also has the strongest first home buyer market in Australia, with loans to first time buyers hitting a high of 20% of all owner occupier loans in June – the highest proportion since 2009, according to data from Domain.

Earlier this year, the state government had extended the $20,000 First Home Owner Grant Boost to December 2017 for the purchase of new homes up to a value of $750,000. About 4,900 applications have been received for the grant so far, according to the state government.

McGrath also said his agency’s agents are reporting far more interest from Sydney and Melbourne investors this year.

“Brisbane's prospects for capital growth, plus superior rental yields of 4.1% for houses and 4.9% for apartments, continues to make it an attractive option for investors,” he writes.

South East Queensland has become a major hotspot for internal migration, according to the Australian Bureau of Statistics (ABS).

Queensland welcomed 11,581 new interstate residents in the year ending June 2016 – a marked increase on 6,417 the year before. In addition, Brisbane recorded its highest internal migration in at least a decade.Among regional centres, the Gold Coast and the Sunshine Coast led the country with 6,428 and 6,200 new residents respectively.

In fact, Gold Coast’s internal migration was the highest ever recorded by the ABS since they began this data series in FY07. Compared with FY15, the Gold Coast’s internal migration was up 39%.

“We see a once in a lifetime opportunity for young families to transform their lives with a move to South East Queensland. The massive new equity that home owners in Sydney and Melbourne have gained could buy them an amazing new lifestyle and far less mortgage stress,” writes McGrath. 

The 2018 Commonwealth Games (GC2018) in Gold Coast is also expected to inject billions of dollars into the economy, with 6,600 athletes and officials and 100,000 visitors attending the event and a global TV audience of more than 1.5 billion anticipated to watch it.

The push to infrastructure due to the games, including the light rail, will boost the economy in the long term, and property prices are responding and increasing at a healthier rate than Brisbane, adds McGrath.

The median house price increased 7.3% to $620,000 in the 12 months to June 2017, according to CoreLogic data. The apartment market was significantly stronger than Brisbane's, with a median price rise of 5.1% to $415,000. 

On the Sunshine Coast, major new infrastructure projects are also driving the property market. Among them is the redevelopment of Maroochydore city centre; the expansion of the Sunshine Coast Airport; and a new business, technology and retail precinct adjacent to the University of the Sunshine Coast.

Median house prices in Sunshine Coast increased 5.1% to $552,000 in the 12 months to June 2017, while its median apartment price increased 3.4% to $390,000.

In conclusion, McGrath says that South East Queensland remains “the most compelling market in the country for both investors and young families”.