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The Sydney housing market is starting to slow following more than five years of strong increases in dwelling values. As the Sydney market slows there could be some upside for other housing markets where capital gains have been more sustainable and rental yields are higher. Australia’s third largest city, Brisbane, has recently garnered more attention as a candidate for improved housing market conditions.
Queensland has historically been a popular migration destination for people choosing to leave New South Wales. The above chart highlights that following the surge in value growth and the widening of dwelling prices between Sydney and Brisbane, migration from New South Wales to Queensland has typically increased. Over the long-term, the average quarterly number of persons migrating from New South Wales to Queensland has been recorded at 12,376 persons. Migration from New South Wales to Queensland peaked over the March 1989 quarter at 18,259 persons and then averaged 14,461 persons per quarter from March 1989 to December 1991. Migration from New South Wales to Queensland peaked again in December 2002 at 18,129 persons and then averaged 15,392 persons per quarter from December 2002 to September 2004. As migration from New South Wales to Queensland has recently picked-up, so far it has peaked at a much lower 13,487 persons over the December 2016 quarter which is only 9.0% above the long-term average. By comparison the 1989 peak saw migration to Queensland peak at 47.5% above the long-run average and the 2002 peak saw migration peak at 46.5% above the long-run average.
Unless those people migrating from New South Wales to Queensland are retirees, employment opportunities must be a key consideration. Post the 1987 boom in Sydney, New South Wales employment growth was slowing while it accelerated in Queensland. Similarly in the early 2000’s employment growth had been greater in New South Wales than in Queensland however, by June 2001 Queensland’s employment was growing at a faster annual rate than New South Wales’ with Queensland employment growth consistently stronger than New South Wales all the way until January 2008. Over this period, dwelling value growth in Brisbane had consistently been stronger than growth in Sydney. Looking more recently, New South Wales has consistently recorded stronger annual employment growth than Queensland between September 2014 and March 2017. Since April 2017, annual employment growth in Queensland has been greater than in New South Wales.
The trends presented here would generally suggest that Brisbane could be well positioned for a pick-up in value growth as the Sydney housing market slows.
One other consideration is whether the same magnitude of people leaving New South Wales for Queensland will actually settle in Brisbane. Both the Gold and Sunshine Coasts are much bigger cities in their own right than they were in 1989 and 2002 plus connectivity with Brisbane is much better than it was previously, so perhaps these migrants will be more inclined to settle on one of the Coasts rather than Brisbane. Over the 12 months to September 2017, Brisbane dwelling values have increased by 2.9% while values on the Gold Coast are 5.4% higher over the year and Sunshine Coast values are 6.6%. ( source corelogic)
So for positive cash flow property in South East Queensland, with above the average capital growth contact us at Dual Income Properties before the end of June so we can get started on the road to wealth creation with property, regards The team at DIP