Intro: Welcome to the Brisbane Real Estate Podcast where each week we'll be answering all of your questions relating to the local property market with CEO of Place Estate Agents, Damian Hackett. Be the first to get market insights, trends and tips on everything you need to know when it comes to Brisbane real estate. To download a copy of our free Brisbane property report, head to eplace.com.au/podcast.
Damian Hackett: Welcome back to the Brisbane Real Estate Podcast and sitting with me here today is Lachlan Walker who's head of research at Place Advisory. Welcome, Lachlan.
Lachlan Walker: Thanks Damian.
Damian Hackett: Well, Lachlan it's your second time we've caught up on the podcast and as you can imagine a lot of people are always keen to know what's happening in the marketplace and the job that you guys have been doing for a very long time, is definitely keeping people informed and the reason we're speaking today is that the much anticipated and widely read annual Brisbane Market Report has landed. So, Lachy what's the key findings? What is the market doing?
Lachlan Walker: We've definitely got two different markets occurring in Brisbane at the moment. The housing market is strengthening and we're seeing reasonable to strong growth depending on the price point, and the apartment market overall is still in that period of limbo, bouncing around at very stable levels but not really going anywhere at this stage
Damian Hackett: Okay. So, what are the numbers? What can you tell us? What's happening growth wise in an overview for houses in Brisbane say in that last 12 months and-
Lachlan Walker: Sure.
Damian Hackett: Maybe even going back 10 years and also with apartments.
Lachlan Walker: So, looking back at 2008, 10 years ago the average price for a house was 500 grand. Today 10 years on, we're looking at a median price of $663,000. So, we have seen over that 10 year period an average growth rate of 2.9% but interestingly the last five years we've definitely seen stronger growth. Over that period of time, we saw a 5% growth per annum so it sort of suggests the Brisbane market has started to turn
Damian Hackett: That makes sense. Obviously 2008 the market was fairly strong and it dropped off around GFC time and then we had the floods, it was steady but still an average price of, what'd you say 663,000 was it? Was that the number? Sounds pretty affordable. I can't find too many $663,000 homes around here in the city, but I guess that's Brisbane as a whole.
Lachlan Walker: That's definitely, that's Brisbane overall.
Damian Hackett: That's always the thing that surprises me. They talk about average prices is like, that's not very average for us.
Lachlan Walker: Yeah, there's definitely that categorical difference between the inner, middle, and outer regions of Brisbane.
So that's reasonable growth you know, 5% in the last five years. I guess if you look and compare it to a place like Sydney and Melbourne that's pretty slow, but that's I guess again gives us more opportunities to move forward since they've had their run. So, what about apartments Lachy, what's been the growth over the last, if any over the last I guess 10 years?
Lachlan Walker: Yeah. So we ... literally over the last 10 years we've seen very little growth in that apartment market in Brisbane. As an average we're talking 1% per annum and I suppose that positions that Brisbane apartment market today as we've been saying in a very affordable space.
Damian Hackett: Yeah, and I guess there are again, markets within markets particularly in the apartment on where you've had a lot of product as it's well documented come online in the last four or five years, and a lot of that was at a particular price point aimed at investors who are filling that market, but obviously then you've got the bigger owner-occupied ones in great locations which are doing well. If we you know, I guess narrow the market down a bit lock, say for housing if you look at the middle ring, outer ring, and inner ring I mean, what's been happening there? What do those number show?
Lachlan Walker: Again, interestingly, the middle ring has probably performed the best over those three markets.
Damian Hackett: In terms of housing now or apartments?
Lachlan Walker: In terms of the housing market.
Damian Hackett: What do you define the middle ring as?
Lachlan Walker: The middle ring is the 5 to 10K- space from the CBD.
Damian Hackett: All right, so in the south it might be places like Greenslopes, etc
Lachlan Walker: Correct, yes.
Damian Hackett: In the west it's what, Kenmore and areas like that and Indooroopilly?
Lachlan Walker: Yes.
Damian Hackett: Going North, Wavell Heights and places like that?
Lachlan Walker: Yeah, Ascot even, Aurizone, Fringe middle.
Damian Hackett: Right. And heading out East I guess it's what, Morningside, Cannon Hill?
Lachlan Walker: Yeah, correct.
Damian Hackett: Carindale even.
Lachlan Walker: And these are the suburbs which that inner Brisbane market saw significant growth through those fringe inner suburbs and as a result the middle ring--
Damian Hackett: So I guess we’re at an average price that you can tell us that's happening over. Is this the same data or is it ten years you've got or is it more?
Lachlan Walker: So this is ten year data again. The median price in the middle ring was $750,000 for the most recent period. And the five year median price growth over that period of time was 5.8% so slightly tipped the inner Brisbane market at 5.4%.
Damian Hackett: What's the average price now for a home in the inner market?
Lachlan Walker: $900,000.
Damian Hackett: Wow.
Lachlan Walker: On the dot.
Damian Hackett: Getting close to that million dollar.
Lachlan Walker: Getting there!
Damian Hackett: Sounds a bit more like it from what I've seen around the place. And tell us about the outer ring, what's happening there?
Lachlan Walker: Outer ring you can ... we can still get in there reasonably affordable purchase. Again, median price of 570,000 for the most recent period.
Damian Hackett: Okay. Are there any suburbs over the last year or five years within those markets we just spoke about that have done particularly well as far as the data tells us?
Lachlan Walker: Yeah, I suppose if we look at the housing market again. Milton was actually the top performer in the most recent period.
Damian Hackett: Is it last 12 months or so?
Lachlan Walker: Yeah, last 12 months. So if you look at the sales over the last 12 months, it had an average annual capital growth of 19.9%. So its massive numbers.
Damian Hackett: Is that a big data set. Does Milton usually have a lot of turnover or?
Lachlan Walker: It’s pretty tight, because you have commercial. It’s through that space.
Damian Hackett: Who else has done really well in the city?
Lachlan Walker: Who else done well? We've Auchenflower, New Farm, St Lucia, Paddington.
Damian Hackett: They all double digits or?
Lachlan Walker: Suggests or double digits and all well with those blue-chip suburbs in the Brisbane market.
Damian Hackett: Okay, yeah. Let's move on to the middle ring. What suburbs have been the best performers?
Lachlan Walker: Middle Ring we saw Ascot top out the middle ring market. 13.3% average growths and then the others.
Damian Hackett: Are there many more with double digits or no?
Lachlan Walker: That’s it.
Damian Hackett: So, tell us the other ones?
Lachlan Walker: During ... At 8.6%, Mount Gravatt, Hendra and then Enoggera was the top five. Top is around 8.3%.
Damian Hackett: Let's talk gallery. What's the star out there?
Kenmore Hills. Surprisingly, 11.9% average annual capital growth there, followed by Jamboree Heights, Shorncliffe, MacGregor and Zillmere.
Damian Hackett: Okay. Are they double digits as well or are they?
Lachlan Walker: No, after Kenmore they sort of drop back to nines and sevens.
Damian Hackett: That's interesting I mean, even though if you look back over the last 12 months on a whole look, the strongest growth has been in the middle ring. If ... the ones with the most double digits seems to be in the inner city.
Lachlan Walker: And if ... They're all held for long periods of time…we're talking anywhere between eight and 12 years as the average hold periods for these places.
Damian Hackett: So have you got anything in a middle outer your relation to apartments you can tell us about or is there any different scenarios have been any great performance you can see over the last 12 months or so?
Lachlan Walker: Again, the apartment market's pretty tight. The difference there is that average annual capital growth where it was sort of talking threes and fours almost across the entire market.
Damian Hackett: So what's been the top performer for apartments in that inner ring?
Lachlan Walker: Spring Hill topped out as the best performer in the inner ring at 3.6%.
Damian Hackett: Okay.
Lachlan Walker: A couple of growth period.
Damian Hackett: So it's still going forward, but obviously at a far less rate so the houses are ... What about middle and outer rings what are the top performers there?
Lachlan Walker: Middle was Alderley it's all yeah that ... it was the best performer because only the suburbs in Brisbane at 5.4% and Kenmore in the outer ring at 4.1%.
Damian Hackett: Okay. So if you look at those two there, have you [inaudible 00:09:26] your head is any reason why you think those two are performing better than others? Is it limited supplies? Is it new product come online that was maybe a bit more expensive or, what are your thoughts?
Lachlan Walker: Yeah, in area like Alderley we were seeing a lot of development occur out there and not necessarily all residential. There's been a lot of infrastructure delivered, access has improved and the job opportunities and employment opportunities out there have driven some population growths.
Damian Hackett: Have you seen a swing at all in the apartment market as far as the biotype? Obviously as we said before we've had a lot of investor activity, local investors, a lot of interstate investors and there will be a lot of offshore particularly throughout Asia over the last four or five years. What's your outlook for the next 12 months you think for apartments? Is it swinging back more towards our occupier or the less investment product being built or whether what do you think?
Lachlan Walker: Yeah, Brisbane is that supply, supply issues that we've seen in Brisbane and definitely starting to tighten up. And as you're talking about buyers in particular, we've definitely seen a swing towards the owner occupier market place and driving that.
Damian Hackett: Usually, I guess usually it tends to lead to probably more expensive properties being built aimed at the owner occupier so.
Lachlan Walker: Yes.
Damian Hackett: Yeah, we could see a bit of some higher averages I guess over the next couple of years.
Lachlan Walker: I think we'll start to see some growth in Brisbane as the supply to clients naturally because people won't be delivering stock.
Great, so I guess we've spoke. Look back at what's happened over the last 12 months and as far as 10 years, get the crystal ball at Lachy. What last suburbs to watch from here on?
Lachlan Walker: We looked at ... Interesting question. In that report we looked at what we thought Brisbane was, what suburbs that we were going to save up for? We looked at areas where we're seeing a lot of infrastructure delivered, at areas which had a much cheaper medium price compared to their neighbors and probably those areas that tick the boxes in terms of location.
Damian Hackett: So hit us with it. Say so have you a property that up in the inner and middle and outer?
Lachlan Walker: No, we just picked our top three for housing apartments.
Damian Hackett: Okay.
Lachlan Walker: And otherwise we'd be talking all day about it.
Damian Hackett: Yeah. So what are they?
Lachlan Walker: So top three houses we picked Red hill, it's an impressive suburban are with glad city views, walking [inaudible 00:11:58] every day in remonstrate and some really key efficient public transport nuts. It was also substantially cheaper than it's nearing suburbs at $160,000 so. And then Balmoral in the Eastern suburbs. Again compared to its neighbors talking million plus, Balmoral does present a good opportunity there for people.
Damian Hackett: Hawthorne had a good run and Balmoral.
Lachlan Walker: Yeah, definitely.
Damian Hackett: It's just that next suburb back. But again there's some lovely hills up there and some good views and good breezes that can be caught from there.
Lachlan Walker: And it still gets access to all those benefits of the suburbs lock, Bulimba does. And then in the Western pocket we picked Indooroopilly. Again, much cheaper medium price compared to its neighbors confluence of Lucia. And it's still benefiting from everything, including public transport, strong schooling districts, etc.
Damian Hackett: It’s a beautiful, well-established suburb, isn’t it?
Lachlan Walker: Correct. The apartment space, Milton, Spring Hill and East Brisbane. Milton has probably been a region which hasn't seen the growths of its neighbors but it's had a lot of key infrastructure elements delivered to it in recent years. Spring Hill's sort of the city's poor cousin, sitting up there with some cracking views, looking back towards the city and North over Brisbane. And East Brisbane, it's so close.
Damian Hackett: And East Brisbane really hasn't seen a lot of development has it? Kangaroo Point's been renowned for a lot of apartments over the years but you've seen a few sites now popping up in East Brisbane. As you said it's so close and as a suburb generally it's probably under performed based on its proximity.
Lachlan Walker: Absolutely.
Damian Hackett: So look, I think that's a bit of an introduction into the report. There's some other key areas which I'm really came to speak to you about.
Lachlan Walker: Cool.
Damian Hackett: Some of the findings, but maybe we can save that for another day, and I think that's given us a really good overview of where we're at. So I really appreciate your time as always.
Lachlan Walker: Thanks, Damian.
Damian Hackett: It's great to catch up and get some insight into the numbers.
Lachlan Walker: Pleasure, cheers. Thanks everyone!