With the Sydney and Melbourne property markets cooling off, all eyes are on which Australian city is expected to experience the strongest growth in 2019. According to a report by the Australian Financial Review, the Brisbane residential property market is expected to experience relatively strong growth in 2019.
House prices in Queensland increased by 0.4% in 2018 and apartment prices increased by 0.7%. According to Core Logic, property values in Brisbane were 4.1% in 2014, 4.9% in 2015, 1.6% in 2016 and 1.8% in 2017. These declining property values have been driven by several factors including increased supply and tightened lending criteria.
The biggest impact on residential market values in Brisbane is the city's apartment market. With apartment prices remaining 5% lower than 10 years ago, the oversupply of new apartments around Brisbane is slowing the overall growth of the residential property market across the city.
According to BIS Oxford Economics, a slight recovery in apartment prices is expected in 2019 with just 5,700 apartments expected to be completed in 2019. Compared to the 10,700 apartments completed in 2017, this moderated supply could help buoy declines in apartment values.
Interstate migration is another factor that drives property prices in cities like Brisbane. According to the Australian Bureau of Statistics, net interstate migration for the decade to June 2017 was 11,000 residents per year. These interstate migration numbers are expected to continue throughout 2019.
In December 2018, rental yields in Brisbane were higher than Sydney and Melbourne. Gross rental yields in Brisbane were 4.5%, overtaking Sydney at 3.3% and Melbourne at 3.5%.
Another key concern for property owners and investors is the credit squeeze. As the effects of the credit squeeze continue to be felt across Australia, Brisbane is expected to be less affected than Sydney and Melbourne. This is due to the higher price-to-income rations in the Sydney and Melbourne property markets.
With growth in Brisbane expected to continue along with promising rental yields, Brisbane is certainly a city to watch in 2019.