Brisbane CBD Property Market : January-May 2014 snapshot

It only seems like a few short weeks ago that we were looking ahead at what 2014 had in store for Brisbane CBD's property market.

And now, with over a third of the year gone, how did the forecasts stack up?

Has the positive 2014 property outlook been reflected in actual sales? Who's buying? Who's selling? ... and at what price? How is the rest of the year expected to develop? How does 2014 compare to previous years?

Forecast vs Reality

Brisbane's CBD has recorded* an extremely strong first 4 months of 2014, reflecting the forecasts made in January. Our CBD property sales are at levels not seen since 2007 - the peak year in the last decade - and bode well for the remaining months of 2014.

Forecasts from property analysts in January included:

"Brisbane is only just now starting to take off and I see much stronger growth there – perhaps over 10%."

"Brisbane is still playing catch up [to Sydney and Melbourne] and, with lower price options, it will likely continue its upward trajectory.

Reality is proving the forecasts to be correct. Buyer interest is from a broad cross-section of local, regional, interstate and overseas buyers. While some sellers are adopting a 'wait and see' approach, the tide is starting to turn with others realising the opportunities that the current market and buyer interest brings. Price growth is set to reach forecast levels if it continues at the current rate of the last 4 months.

One of the biggest surprises is how strong the sales have been compared to similar periods over the last 10 years.

Interestingly, both Buyers and Sellers are the same type of people - 73% are investors, and 27% owner occupiers. However, some investors buying up CBD apartments are planning to also live in it or have family members live in it for certain periods of time, renting it out for the rest.

Who's buying? What and Why are they buying?

Queenslanders are still the main buyer group in the CBD marketplace. There has, however, been a decided increase in the number of interstate and overseas buyers - from around 25% in 2013 to just on 40% for 2014 so far. It will be interesting to see whether this trend continues short and mid-term.

As mentioned above, investors are in the majority once it comes to buying CBD property, but there are several interstate, overseas and also Queensland buyers intending to rent out the property most of the time and use it themselves when in Brisbane or have their kids live there whilst studying in Brisbane. This is becoming an increasingly popular option.

Buyers also come from the Baby Boomer generation, wanting to down-size from their suburban house to a more practical living solution.

It's no surprise that two bed apartments are still the favourite, with 60% of buyers choosing this type of CBD apartment. Interest in one and three bed apartments is exactly the same as in 2013, so buyer apartment type preference remains stable.

Brisbane CBD property is also perceived as being 'better value' than Sydney for some interstate investors, and for some European nationals a better place to park their money than in their homeland.

Who's selling? Why are they selling?

Changing investment and business options/plans, and retirement are main reasons for selling. We are also starting to see young professionals now moving on with their family planning and wanting a house & garden for their potential family. This not only true for owner occupiers but also some investors wanting to access the funds tied up in their CBD investment apartment.

Property prices

Average property price for the first four months of 2014 has increased 10.5% compared to the same time period last year. This means the Brisbane CBD is on track to achieve 10%+ growth for 2014 if current trends continue for the rest of the year.

How does 2014 compare to previous years?

Once it comes to actual CBD apartment sales it's a real eye-opener. Sales levels (number of properties sold) for the first months of 2014 are comparable to 2007 - the strongest year in the 10 years of my real estate agency. 2013 also started off strongly but not at the levels we're seeing in 2014.

This again is cause for optimism in the Brisbane CBD property market for the remainder of 2014.

Forecast for the rest of 2014

The good news is that the strong start to 2014 in Brisbane's CBD is expected to continue throughout the year. Effects of the Federal Budget announced this week may impact some areas of property however property analysts do not expect any resultant major changes to the property market. It will be interesting to see if seasonal fluctuations and the G20 meeting of world leaders has any effect on buyers, sellers and the CBD property market.

I anticipate that the global coverage and focus on Brisbane from the G20 will create follow-on interest from people overseas who may have not previously considered the 'little cousin' of Sydney and Melbourne in their property research or plans - in particular, the CBD.

If current trends continue at the same comparative seasonal rate then it's set to be a bumper of a year for Brisbane's CBD property market.

Full steam ahead!!


* All statistics based on HS Brisbane Property sales statistics January - May 2014

(Source: 'Experts upbeat about Brisbane', HS Brisbane Property Market - February 6, 2014; Louise Moeller - HS Brisbane Property marketing consultant)

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