Why Brisbane will not grow like Sydney and Melbourne – Brett Warren

Brett Warren has been troubled about why the Brisbane market, that he knows so well, does not keep pace with the Sydney and Melbourne markets in terms of growth.  He also has some thoughts about how the South East Queensland market will perform over the next decade.
Kevin:  We’ve spoken quite often on the show in the past about how there is no one property market; there are different property markets all around Australia. Could be highlighted, I guess, when you consider just how much growth has been in Sydney and Melbourne, and then you have a look at the Brisbane market, which in itself has had steady growth but nowhere near to the volumes that we’ve seen in Sydney and Melbourne. So, why is that? Why hasn’t Brisbane bloomed like Sydney and Melbourne?
I want to ask this question because I’ve read a very interesting blog article written by Brett Warren, who is the Senior Property Strategist at Metropole in Brisbane. He joins me, and I guess if anyone’s going to have a feeling about how to answer that question, it’ll have to be you, Brett.
How are you? And welcome to the show.
Brett:  Good. Thanks, Kevin. Thanks very much, good to be here.
Kevin:  Mate, I know you’re a property investor yourself, and this is probably a question you’ve asked yourself as well, but how would you answer it to me? As an investor, I’m asking you, why hasn’t the Brisbane market grown like Sydney and Melbourne?
Brett:  Yes, it’s a really good question, and obviously something that I’ve looked into myself. After the GFC in 2008, which everyone had, Brisbane didn’t have as much luck. As you know, in 2011, we had the floods, and from that point on, our mining boom has really hurt Brisbane’s confidence. There are a few other things as well that I looked into, too.
Kevin:  The numbers: I know we can always come back and look at the numbers and that’s all very historic, but has that helped you understand the situation? Tell us what you found out.
Brett:  Absolutely. Yes, like many property investors, I’m an analytical type of person, so I always turn to the numbers. What I’ve actually done in this case, Kevin, is gone back to the last time Brisbane was in a period of excessive growth in 2008, just before the GFC, and the numbers are considerably different to where we are now.
Our population growth has been slashed by more than a half. Overseas migration is down by about 70%. As you know, our unemployment rate has increased by about 2%, so there are about 62,000 more people out of work. And during that period of time, our wage growth has come back from about 4.2% per annum to only be about 2% per annum now.
Kevin:  What are the most important measures there? You’ve given us population growth, interstate migration, overseas migration, labor, unemployment. Are there any in there that are key indicators for you?
Brett:  Population growth, absolutely. With higher population growth, you get more demand for housing in terms of buying, but also renting.
In 2008, you probably remember reading the headlines that we had almost a thousand people a week moving to Queensland from interstate. That’s down by almost two-thirds, and more importantly, overseas migration is down by about 70%. They’re real key factors, especially when we’re talking about pushing the price of housing up and things like that.
Kevin:  There’s a blog article that Brett has written that we’ve published on our website. Go and check it out for yourself – a lot more detail about that. But I want to get to the end of this conversation, the bottom line for you.
Is there light at the end of the tunnel? Have you been able to find that maybe the market has turned around a bit?
Brett:  Yes, absolutely. I just ran some more numbers in 2016 as opposed to 2015, and the numbers are starting to turn around. Our population growth has started to head north again. We’re getting more people moving from overseas and also interstate, and our unemployment rate has come down. The number of people actually getting employment is decreasing as well, which is what we want. We want more people in work, we want more people coming into Brisbane and driving those property prices upwards.
Kevin:  Let’s have a look at the next decade. Is there anything you’ve learned from the figures? And I know you can’t give us any undertaking about what’s going to happen over the next ten years, but what have you learned from looking at these figures, and how do you feel about what’s going to happen in the next decade?
Brett:  I’m actually quite optimistic, Kevin. On the blog there, I’ve put down what the Queensland median house price has actually been since 1981, and every ten years. It hasn’t been as consistent with other states, and I can track back to 1991 where it was $113,000. And by the end of 2001, ten years later, it had only managed to go up to $166,000.
So, there wasn’t that consistent ten-year doubling effect, and the next decade actually almost tripled. That’s what we can kind of draw parallels between what may potentially happen in the next decade. So, it may not get to that extent, but I’m really optimistic about the next decade in Brisbane, especially if those numbers continue to perform as they are in the last year or two.
Kevin:  Good on you, Brett. Good talking to you, mate. And it’s a great article. You can check it out at our website, just go to RealEstate.com.au. Just go into my own featured channel and you’ll find it in there. It’s a blog article written by Brett Warren, who is Senior Property Strategist at Metropole in Brisbane.
Brett, thanks again for your time.
Brett:  Thanks a lot, Kevin. Good to be with you.

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