Bris­bane on the boil

The city tops a sur­vey that lists sub­urbs most at­trac­tive to in­vestors, prop­erty ed­i­tor Turi Con­don re­ports

The Weekend Australian - Review - - Prime Space -

IF you bought a house in Bris­bane as an in­vest­ment in the past year, then you prob­a­bly made the right choice. Thirty- eight sub­urbs in the Bris­bane re­gion saw house prices grow by more than 10 per cent and those sub­urbs showed a rea­son­able rental re­turn to boot.

In the Syd­ney re­gion, only three sub­urbs made the grade.

With more in­vestors re­turn­ing to the mar­ket, The Aus­tralian asked RP Data to look at which sub­urbs around the coun­try were pulling ahead.

The re­searcher used two mea­sures: prices had to grow by more than 10 per cent, plus the sub­urb needed a rental re­turn above 4.5 per cent in the year to May ( see sub­urb ta­bles on Page 2).

What the re­search shows is a still patchy hous­ing mar­ket, but one start­ing to re­cover with good longer- term in­vest­ment op­por­tu­ni­ties emerg­ing.

In gen­eral terms, Bris­bane is the pick of the cap­i­tal cities, and houses in any city will con­tinue to be a bet­ter in­vest­ment than apart­ments, de­spite a re­cent kick in unit prices, says RP Data CEO Gra­ham Mirabito.

Eco­nomic fore­caster BIS Shrap­nel also picks Bris­bane as likely to be the best per­form­ing cap­i­tal hous­ing mar­ket in com­ing years, while Mac­quarie Bank favours Melbourne.

De­spite a hous­ing mar­ket labour­ing un­der af­ford­abil­ity is­sues af­ter last year’s three in­ter­est rates rises, there were some stel­lar per­for­mances from a hand­ful of in­di­vid­ual sub­urbs.

In re­sources- driven Dar­win, the north­ern sub­urb of Rapid Creek saw house prices surge 38.5 per cent to $ 485,000 in the year to May, with about half the city’s 48 sub­urbs bet­ter­ing 10 per cent price growth and re­turns above 4.5 per cent.

Ade­laide per­formed, well with 32 of the re­gion’s 435 sub­urbs ( or 7.4 per cent) beat­ing RP Data’s bench mark for houses, and 28 sub­urbs ( 6.4 per cent) for flats.

In Bris­bane, the city’s units also scored well, with 20 ( 5.3 per cent) of the re­gion’s 378 sub­urbs hav­ing apart­ments above the bench­mark.

In Perth, the hous­ing bub­ble has burst, but not be­fore the east­ern sub­urb of Boya recorded 39 per cent price growth for the year, tak­ing the me­dian price to $ 490,000. But in Perth the surg­ing prices of last year meant rents could not keep pace, and rental re­turns for in­vestors fell.

The re­sult was that Boya was the only sub­urb in Perth where houses pulled ahead of the RP Data bench­marks.

For units, again only one Perth sub­urb made the grade — West Perth, where apart­ment prices rose 30.5 per cent for the year to a me­dian of $ 261,000 and the rental yield was 4.84 per cent.

Syd­ney’s per­for­mance was woe­ful, af­ford­abil­ity con­tin­u­ing to bite.

Only three out of the Syd­ney re­gion’s 796

with sub­urbs beat the RP Data bench­mark. For units, four sub­urbs made the grade — Ber­ala, Brook­vale, Cen­ten­nial Park and Waitara.

In Melbourne, RP Data says the city is start­ing to show some rea­son­able growth, but it is yet to gain enough mo­men­tum to pro­vide strong in­vest­ment sta­tis­tics.

Only four out of the 464 sub­urbs in the Melbourne re­gion bet­tered the bench­mark for houses and the same num­ber for units.

Look around the coun­try and the in­ner- ring sub­urbs are where the ac­tion is, says Mac­quarie Bank head of prop­erty re­search Rod Cor­nish.

At the other end of the spec­trum Aus­tralia’s outer sub­ur­ban hous­ing mar­kets are stag­nat­ing at best and at worst are be­set by fam­i­lies’ fi­nan­cial stress and forced sales.

Cor­nish ar­gues there will be a top- down re­cov­ery typ­i­cal at this stage of the prop­erty cy­cle.

‘‘ Don’t for­get its a sta­bil­i­sa­tion phase, not a strong up­turn phase,’’ Cor­nish says.

‘‘ What will do best is the in­ner- ring sub­urbs and some mid­dle- ring sub­urbs where there is some scarcity of prod­uct, ’’ Cor­nish says of Bris­bane, Melbourne and Syd­ney. In the outer sub­urbs, it will be a cou­ple of years be­fore there is any im­prove­ment.

Em­ploy­ment prospects in harder- hit ar­eas is start­ing to im­prove, but it takes time for wages to grow and re­bal­ance af­ford­abil­ity, Cor­nish says.

In Perth, de­spite a slow­ing mar­ket, some in­di­vid­ual projects are far­ing well.

‘‘ Ear­lier this year, one river­front Perth apart­ment de­vel­op­ment sold out in two weeks,’’ Cor­nish says.

But he cau­tions that that is not the norm in the de­flat­ing Perth mar­ket.

Any re­cov­ery will take longer than ex­pected a year ago ow­ing to 2006’ s three in­ter­est rate rises.

And the speed of the re­cov­ery will de­pend on the next round of rate rises, with Mac­quarie ex­pect­ing one or two 25 ba­sis- point rises in the first half of 2008.

‘‘ But the fur­ther we go into the sta­bil­i­sa­tion phase, the less the im­pact of a rates rise, com­pared to right now while the mar­ket is still frag­ile,’’ Cor­nish says.

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