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Where to Invest in Brisbane Real Estate
April 2, 2014
Brisbane is a market full of opportunity for those considering investing in property for sale as it poises all the right factors to suggest moderate to strong capital growth over the next few years and we have already started to see this over the last few months.
What are the better areas that will outperform the rest? Where you invest in Brisbane ultimately depends on your budget and your investment strategy but in every rising market there are always suburbs that achieve much stronger capital growth and while no one has a crystal ball through understanding the fundamentals of supply and demand and what drives the property market we can make a far more educated decision.
Here’s an example of the importance of researching where to invest in Brisbane real estate – if two people invested in a property worth $450,000 and one delivered 5% growth per annum and the other 7% that equates to an additional $160,000 in capital growth over 10 years. This makes every bit of research worthwhile as a property investor. Now that is for one property alone, if you multiply this across several properties you may hold in your portfolio you can quickly realise the potential of the difference it can make if you are investing with a buy and hold strategy.
When researching the property market some of the things you should consider when conducting your due diligence are as follows:
Supply and demand statistics
Supply and demand is one of the most important factors when assessing where to invest as it creates both capital growth and rental growth. Property prices move in response to changes in demand and supply. If the demand is high and supply low, prices will go up – this is an absolute fundamental law of economics.
Consider factors when assessing the supply and demand such as the discount rate, the auction clearance rate, property on the market as % of dwellings, vacancy rates, rental availability, and average days on market. When researching the statistics what you are looking for here is a trend that indicates an increase in demand – this avoids purchasing in an already hot market.
Ongoing infrastructure within an area is a vital key to positive property growth and will ensure this for years to come. By investing in property in areas where there is major infrastructure investment you can count on an area increasing in value. This essentially increases the value of property through making an area more appealing and desirable to live and also increases the demand for jobs and therefore accommodation.
The more population growth within an area the more renters and demand for property in the area. Areas with population growth require employment and amenities to support their residents – growth areas – which are a great attraction for the real estate investor.
With housing affordability the way it is, lower priced properties are in greater demand than more expensive ones. More people can afford a $300,000 house than a $1,000,000 house. The more people trying to buy a $300,000 house the more pressure there is on houses in that price range.
While historic trends don’t necessarily indicate whether the future of that area will perform poorly or well it is important to understand how the area has performed to date. Has it consistently outperformed other areas? If so why has this been the case? Or has it been flat for a while and is it now showing signs of recovery providing an opportunity to capitalise on upcoming capital growth.
My tips and insights on Where to Invest in Brisbane
Suburbs around 3 – 10 kms of Brisbane west including Toowong and Indooroopilly can benefit from good access to the city and the university and offer affordability with strong long term growth prospects. These suburbs all have solid long term growth rates with average annual growth of around 6-8% over the past 10 years. Long term growth prospects are good with improved transport links to the CBD including plans for a tunnel between the Western Freeway at Toowong to Everton Park.
Toowong has been called the “North Sydney of Brisbane” as it has a mix of commercial and professional space with residential areas, close to the CBD. Toowong is also on the Brisbane River and has its own commercial hub. It is actually a very vibrant, buzzing suburb. It has a major shopping centre, Toowong Village, and a train station. Plans for tunnel links to Kelvin Grove will increase the appeal of the location adding to the close proximity and transport appeal of the area. Toowong has also had consistent growth over the years, with some growth every year over the 10 years to 2011.
Indooroopilly offers significant commercial and retail sectors and also has the Indooroopilly Shopping Centre – the largest shopping centre in Brisbane’s western suburbs. Indooroopilly also is on the Brisbane City Council’s draft city plan which allows for higher densities where the Brisbane City Council is looking to allow two or even three houses on a standard block.
Ipswich and the western corridor is now well known as a growth region. Major new residential, employment, education and recreational projects are already well advanced. Convenience in this corridor is the key asset, with easy access to Brisbane. Ipswich has shown strong growth in the past and this will continue into the future with many suburbs that are attractively affordable for first home buyers and investors on a budget. Infrastructure is set to boom with $16.9 billion in major projects underway. The combination of affordability, infrastructure investment, plenty of job nodes, rail links and improved transportation to the CBD are some important factors that suggest an increase in property prices.
Darra also in the western corridor (approx. half way from Brisbane to Ipswich) has been one of my favourites for a while now – I believe this is a little hidden gem in the western corridor. Under 20 minutes from the Brisbane CBD this little suburb offers affordability with property prices far less then surrounding suburbs. Darra also has a train station with direct access to the CBD. You can pick up a 3 bedroom home on a descent block starting from approx. $270,000.
David Chehade Founder and Managing Director of Real Estate Investment Finance is an active and passionate property investor who loves sharing his knowledge and helping others attain the dream of owning property and building wealth. Graduating in 2008 with a bachelor of commerce in Finance, Financial Planning and Accounting David continued his financial studies with a diploma in Financial Services specialising in Mortgage Broking. With an office in Brisbane and the Sunshine Coast he works with clients across South East Queensland and also work remotely with clients Australia wide. The benefits of working with a specialised property investment mortgage broker are endless as we pride ourselves on keeping up to date with the Australian property market and the wide range of suitable finance products available on the market.
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