2019 is here, with 2018 going down as one of the most contentious property years on record.
So what were the biggest issues making news in 2018? And where do we forecast the Brisbane property market to go in 2019?
- 1. Property Market Crash
- 2. Brisbane’s time to shine – the property market in 2019
- 3. Five Suburbs to watch in Brisbane
- 4. Four Areas set for growth due to School catchments
- 5. Stricter lending criteria ahead?
- 6. Brisbane’s riskier suburbs in 2019
- Bonus: Changes to the flight path
1. Property Market Crash
The 40% market crash predicted by 60 minutes (those credible property experts) hasn’t quite come to pass.
The reality is Australia’s property market moves in cycles, from peak to trough and Australia’s largest market Sydney has seen over 80% growth over the past few years (and much more over the past 20 years).
While we have seen values in Sydney come off by 5.6% from their peak in July 2017 this is nothing new.
In the GFC we saw Sydney dwelling values fall 7% over 12 months, and after the Sydney Olympics between 2003 to 2006 we saw a reduction in values of 7.1% over the same time period. In fact, the falls we have seen over the last 12 months have been mild compared to previous downturns.
…But where to from here?
I think it’s important to remember that Australia doesn’t have one single property market. Each state, each city, each area has its own stage within the property cycle.
Potential for a rising property market in Brisbane is also supported by a recent analysis by BIS Oxford Economics.
They are saying Brisbane property prices could surge as much as 20% over the next 3 years as economic growth and affordability become factors that slow down Sydney and Melbourne.
Overall there are lots of positive factors underpinning our property market including:
- ✅ Strong population growth forecast and net migration up 27.3% year-on-year;
- ✅ Low unemployment and good employment growth, with ABS reporting “trend employment increased by 303,100 persons (or 2.5 per cent), which was above the average annual growth rate over the past 20 years of 2.0 per cent”; and
- ✅ Inflation is under control, at the lower end of the RBA’s target band of 2-3%.
Brisbane’s population is growing faster than the 10 year average, at about 23,000 new residents per year.
And according to Property Researcher Michael Matusik, there is a need to build about 8,825 new dwellings to meet this demand.
2. Brisbane’s time to shine
Brisbane’s property market has been slow and steady, with dwelling prices rising 0.3% for the year to November, and 0.1% over the past three months according to Corelogic.
The property market in Brisbane is set for a strong start in 2019 thanks to a few major projects like Queens Wharf (aka the new casino), Howard Smith Wharves and very strong housing affordability compared to Sydney and Melbourne.
Brisbane’s property market is much more affordable than Sydney and Melbourne, according to research by Michael Matusik the current price to income ratio required to buy in Brisbane is 5.3 times at a median house price of $524,000.
Compare this to Sydney at 10.80 times income, and Melbourne at 8.40 times income with a median house price of $829,000.
Even at Hunter Galloway, we are noticing an uptick in interstate enquiries from people who are migrating from Sydney to Brisbane so we think this is a space to watch.
3. Our suburbs in Brisbane to watch in 2019
Based on our tips on how to best research property in Brisbane (using these free tools), it looks like the following suburbs are ones to watch in 2019.
Average Annual Growth
Weekly Median Advertised Rent
Gross Rental Yield
4. Four Areas set for growth due to School catchments
While it might not be high on your radar if you are buying an investment, properties in good school catchments across Brisbane have historically given much better capital growth than those in other ares.
With some real estate agents reporting demand for properties in School Catchment areas increasing by over 30% in the past 12 months, is buying in a school catchment area a good option?
In our experience, some buyers are more willing to invest in their family than pay for private school fees, and according to some Real Estate agents we have spoken to, buyers are willing to pay up to $100,000 or around 10% more for a property in the Brisbane State High School catchment area.
So which are the suburbs to watch?
The top ranked public high schools in Brisbane in 2018 (and most likely set to continue to 2019) according to Better Education are:
- ✅ Brisbane State High School
- Suburbs: South Brisbane, Highgate Hill, West End, Dutton Park and some parts of Woolloongabba.
- ✅ Mansfield State High School
- Suburbs: Mansfield, Wishart, MacKenzie and some parts of Burbank.
- ✅ Indooroopilly State High School
- Suburbs: Indooroopilly, Toowong, Taringa, St Lucia, Auchenflower and some parts of Chelmer.
- ✅ Cavendish Road State High School
- Suburbs: Holland Par and some parts of Coorparoo.
- ✅ Mount Gravatt State High School
- Suburbs: Mount Gravatt and Mount Gravatt East.
How do you know if your property in Brisbane is within these schools catchment areas?
You can use the Queensland Government School Catchment Map here.
5. Stricter lending criteria
While the Royal Commission has put more focus on the banks and their lending practices it certainly hasn’t stopped them from lending.
We have seen bank’s appetite for lending continue to be strong in 2018, and expect it to remain this way into 2019.
What are the secrets to getting your loan approved in 2019?
#1. Consider a different bank
Different lenders have different policies, and some simple things can make a massive impact including the amount they lend you.
Consider a single person on $50,000 per year looking to buy their first home.
There is a $67,000 different in how much the banks will lend… For this person earning $50,000 that is almost 1.4 years worth of salary difference!
So it does pay to look around and see what your options are.
#2. Reduce your interest costs with principal and interest repayments
2018 also saw a massive differential between interest only and principal and interest repayments – in some cases upwards of 1%.
So how can you get lower interest costs? Check out P&I repayments.
According to Macquarie Bank, “using a 0.5 percentage point [interest rate] differential, Macquarie found that a bank customer in the top tax bracket with a $500,000 loan would be $6,000 better off after five years, and $12,000 better off after 10 years switching to P&I.”
#3. Review your interest rate
With the RBA dropping its cash rate twice in 2019 interest costs have come down considerably, making property in Brisbane much more affordable.
As you can see from this data, each interest rate cut can give annual savings of between $1,317 on a loan of $250,000 all the way up to $5,267 in annual savings on a loan of $1,000,000 or more.
It is worth speaking with your mortgage broker if you have an existing loan to see if you can reduce your annual interest costs today.
Read More: Home Loan Guide to Brisbane
6. Brisbane’s riskier suburbs in 2019
While we have found the banks lending criteria is a bit more relaxed in 2019, if you are looking at buying a unit in Brisbane you might be asked for a 30% deposit by some banks.
(Don’t worry this is not ALL banks)
We have found some banks have created a bit of a black list on certain suburbs in Brisbane, where they have applied stricter criteria to loans, could reduce rental income and may ask for more deposit.
Brisbane’s so called ‘riskier suburbs’ include units in:
- Milton (4064)
- Brisbane CBD (4000)
- Fortitude Valley, Herston, Bowen Hills, Newstead (4006)
- Kangaroo Point, East Brisbane (4069)
- Woolloongabba, Brisbane, Dutton Park (4102)
As I mentioned some banks are completely fine with lending in these suburbs, it’s just a matter of working with a Mortgage Broker that understands the different credit policies and can help achieve your goals.
While some banks might try to charge you lenders mortgage insurance if you don’t have a 30% deposit, we have access to banks who do not – and can look at interest only terms.
If you need help with navigating the changing landscape, get in touch with our team or give us a call on 1300 088 065 to discuss you situation.
Bonus: Changes to the flight path
When you’re buying in Brisbane most people know to check if the property has flooded, and get an RP Data valuation to make sure you’re paying the right price but do you know you should also check the flight paths…?
The Brisbane Airport Corporation (BAC) has updated its guide to Current and Future Flight Paths – and how the noise might affect your property.
The most important part of the report is on page 33 and 34: detailing the noise contour map, and includes which suburbs are going to be most affected by the increase in aircraft traffic.
It’s hard to say how this will affect property values in this area over the next 20 years, but is worth keeping in mind if you are buying a house – you might want to negotiate some double glazed windows into the contract!
Brisbane Flight Path Tool: See if your property is affected
Ok this is an added bonus that I just found, the Brisbane Airpot Corporation has just created a new flight path tool to see if your property is affected.
Try it now: Brisbane’s new runway flight path tool
That’s it for now
Overall the Australian property market is looking steady for 2019 and we’re looking forward to seeing you this year!
- LVR Calculator, and What is Loan to Value Ratio?
- State Custodians Home Loan Review
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- How to Overcome a Poor Property Valuation
- Bank of QLD Home Loan Review
- First Home Owners Grant QLD 2019 [Are you Eligible?]
Ready to take the next step toward buying? We’re happy to help. Schedule a call today with a Home Loan Expert from Hunter Galloway, the home of home buyers.