By Propertyology Head of Research, Simon Pressley
Since about 2013, Brisbane has consistently appeared regularly at the top of property commentator’s list as the most promising capital city for value gains. And, it’s also proved a perennial disappointment!
Each year, those looking to influence investors highlighted the city’s relative affordability and attractive weather while proclaiming “This year will be Brisbane’s year!”
Now, I love Brisbane, don’t get me wrong. It’s my hometown and there’s plenty to keep residents excited, but it has been arguable the country’s most discouraging property market performer in terms of expectation versus results for several years.
But there was a time when the capital of the Sunshine State produced an extraordinary run on property price growth that had southern property owner’s mouths agape.
The glory days
Brisbane could do no wrong during the 7 years ending 2007.
The median house price for Greater-Brisbane increased from $132,000 at the end of 2000 to $369,000 in December 2007. For those trying to do the math, that’s 178 per cent price growth over 7 years. Now that was a real boom!
The most lucrative years within that long prosperous era were 2002 to 2004.
On reflection, It’s really not all that long ago! And while much has changed, some things are still the same.
2002 to 2004 was amidst a period when large parts of Australia, including Sydney and Brisbane, were on significant water restrictions. Water tank businesses were in vogue.
It was when Foxtel launched digital television in Australia, Telecom (now Telstra) was floated, and a Free Trade Agreement between Australia and the United States was signed.
In Queensland, Premier Peter Beattie held the reins and was in the second half of his 9-year stint in the top job. A self-proclaimed media tart, Mr Beattie was the ultimate salesman for Queensland and its wears. Beattie’s positive persona was reflected in the high level of business and consumer confidence that the state enjoyed.
Brisbane’s then Lord Mayor, Jim Soorley, came to the end of his 13-year tenure in 2003. He left a legacy which included cosmopolitanism of the city through sidewalk dining and bicycle paths. When Soorley passed the baton to ‘Can-Do’ Campbell Newman in early 2004, Brisbane then went through a period of significant infrastructure investment.
There were genuine signs that the city was evolving beyond its ‘big country town’ image.
Brisbane was kicking goals in more ways than one back then. John Eales was at the peak of his powers, leading Queensland and Australia to the top of rugby rankings. The Queensland Bulls won back-to-back Sheffield Shield titles in 2001 and 2002. And, Steve Bradbury was last man standing, going on to win gold in the winter Olympic Games.
If I may be forgiven for gloating about something which I’m deeply passionate about, this was also an era when the mighty Brisbane Lions became arguably the most successful sporting team in modern history. Oh, how privileged I was to be there at the MCG for each of the Lions’ three consecutive premierships (2001-3) and again when they finished runners-up in 2004.
Back on the economic front, 2002 to 2004 was an era of strong economic development nationally. John Howard was prime minister, confidence was high, and the national unemployment rate hovered around 6 per cent.
Interest rates were twice as high then as what they are now but that didn’t deter people from borrowing because wage growth was strong and banks were actually lending money.
Despite the more relaxed credit, the bank’s excellent lending policies back then were the very reason that Australia survived the GFC just five years later.
They came in droves
Coming off the underperformance of the 1990s, Brisbane was keen for good news. Sydney had enjoyed some time in the sun thanks to the highly lauded Olympic Games but, with property prices setting some buyers heads spinning, Brisbane seemed to offer an excellent alternative.
Yes, affordability was bringing new residents to from interstate to Brisbane. But, unlike recent increases in interstate migration, the 2002 to 2004 period was enjoying strong employment growth. Instead of being ‘pushed’ out of Sydney and Melbourne (as they are now), southerners were being lured to Brisbane by the hive of energy and a sustained jobs boom.
Queensland’s population growth rate was twice as strong as Victoria’s and 4-times bigger than New South Wales.
Brisbane was becoming an economic powerhouse, and plenty of people wanted a piece of the action. Virgin Blue and Rio Tinto were just two of the big names setting up offices in Brisbane during this period, and others were following their lead.
In 2002 alone, the Greater-Brisbane median house price increased by 20 per cent. If you think that’s big, it went up by a further 36 per cent in 2003 and 22 per cent in 2004. Ka-boom!
The 65 per cent cumulative price growth in Sydney over the 5-years ending 2017 pales in to insignificance up against Brisbane’s 178 per cent over those 7-years ending 2007.
What lies ahead
Queensland is again enjoying increased population gains. Yes, it’s largely due to the relative housing affordability and less stressful lifestyle.
But, the failure of consecutive state governments to capitalise on a world-wide tourism boom and an extremely exciting outlook for agribusiness is telling.
Brisbane in 2018 is still one of the best places in Australia to live. However, as an investment option, it’s still to hit its straps.
Don’t get me wrong, the underlying fundamentals of Brisbane’s property market are very strong. The glory days of double-digit price growth may return.
But it takes more than the sun shining on affordable houses. Without good nutrients in the soil, growth will always be stunted. Only time will tell whether or not the incumbent state Premier and Brisbane Mayor are as good at gardening as their predecessors of those glory days.
Propertyology is a Brisbane-based buyers agency and (national) property market research firm. We help everyday people to invest in strategically-chosen locations all over Australia. Testament to our multi-award-winning success is Propertyology’s expertise in being the only company in Australia to forecast Hobart’s remarkable resurgence and begin investing there in mid-2014, before the boom. Our buyer’s agents are now actively investing in a few other locations that resemble what Hobart looked like in 2014. Like to know more? Contact us here.
By Propertyology Head of Research, Simon Pressley