Brisbane property market disappointing investors: HTW

Brisbane has failed to reach investor expectations of a growing property market, according to Herron Todd White's (HTW) latest monthly market report.

The property advisory firm noted that investors were expecting Brisbane property prices to soar, however, it has failed to meet expectations.

"Good old Brisbane has seen the broad gamut of market activity from feast, to famine, to... “mehh”," the HTW report stated.

"Here we are in one of the most attractive, saleable and liveable cities on the continent... and we still haven’t seen our market firing strong right across the board.

"There have certainly been winners and losers but overall, average punters were expecting bigger value gains in the past four years.

"A lot of talk in 2013 was around Brisbane being ‘THE’ place to invest, but it’s generally failed to rise to expectations."

At present, HTW suggest there’s no doubt the strongest markets continue to be within 10 kilometres of the CBD.

"That’s a common theme here in Brisbane – stay close to the city centre and you won’t get hurt.

"There are a few reasons why you buy within a reasonable distance of the big smoke.

"Number one, this has traditionally been our most successful sector. In Brisbane, the closer in you are, the better your chances of consistent capital gains and ongoing tenancy.

"You do, however, need to be selective about property type and quality.

"The mantra must be whenever possible, choose detached housing in a decent location above all else.

"It will reduce the risk and improve your chances of success."

Herrod Todd White advises investors to be cautious about off-the-plan purchases and new units.

"As we’ve been saying for some time now – be very cautious about new units and off the plan purchases, particularly those designed to appeal to investor buyers. They are almost impossible to justify as a good choice in the current market.

"Another reason this inner zone is [Brisbane's] best? There’s no doubt that compared to Sydney and Melbourne, our property prices are an absolute steal. We’re regarded by many as the third big capital (apologies to Perth) so if you’re a transient investor focussing on between big cities and you’re looking for more property bang for your buck, it’s hard to ignore Brisbane and the suburbs closer to the centre."

Price points of appeal within this magic radius are broad. Any purchase between $500,000 and $1 million is sure to catch the eye of buyers – and most are looking to owner-occupier stock for solid investing.

HTW said the strongest interest comes from young professional couples as well as families who want to be in close proximity of schools, public transport and services.

"We also find once you go above the magic $1 million mark, the number of potential purchasers begin to decline significantly," the report observed.

Cheaper buy-ins for investors do tend to be in suburbs a bit further out. There are plenty of sub- $500,000 options in areas like Kingston, Slacks Creek and Caboolture and certainly tenant demand remains fairly strong, however you must still look for good land content with a detached home if you want to mitigate risk.

One example would be a five bedroom home at 74 Kana Crescent (pictured above) that was recently sold for $509,500.

When talking famine market, it is in fact these further flung addresses that struggle most.

Property type is key to performance, with townhouses and units in outer suburbs are very slow to sell.

This is evident in areas such as Marsden and Kingston where there are a lot of established townhouses as well as a continual supply of new townhouses that are mainly sold to interstate investors.

This high level of supply is well and truly exceeding demand and turnover can be a bit retched at times.

There’s also quite a large price difference between a new townhouse and an older established townhouse – although the rental return on the older townhouse is comparatively strong.

The investor who feels they must look at attached housing a bit further out, should consider purchasing a discounted older townhouse that may need a bit of renovation rather than something brand spanking new, HTW advises.