Source: Financial Review, 17 January 2018.
Queensland is in a historical sweet spot for home price growth with an analysis of interstate migration showing that the gap in home price between Sydney and Brisbane could soon start narrowing.
In 2002, the median Brisbane home price equated to just 41 percent of a Sydney home – a historical low.
But interstate migration to Queensland started to surge, peaking in 2003 at about 40,000.
Home prices started to rise as the interstate migration rose and the gap between median Sydney and Brisbane prices started to narrow.
Brisbane home prices were able to reach as much as 78 per cent of a Sydney home price in 2008.
CBRE researcher Ally McDade has analysed the numbers and highlights that the same process is starting to happen again.
She points to Brisbane’s median home price now being about 43 per cent of a Sydney home price and that interstate migration is surging.
“At June 2017, levels of interstate immigration reached the highest quarterly and annual growth since 2008,” she said.
“Over the year to June 2017, interstate migration to Queensland increased by an impressive 50 per cent, or circa 17,500 persons.”
“As more people migrate to the Sunshine State, the equity wealth built in Sydney is transferred to Brisbane. This increase in demand, coupled with a higher perceived value, has historically driven Brisbane real estate prices higher.”
Ms McDade suspects this will help clean up any oversupply of apartments to which the Reserve Bank of Australia has been referring.
“In the short term, future increases in interstate migration will most likely assist in absorbing the current over-supplied apartment market as opposed to contributing to any signiﬁcant price growth,” Ms McDade said.
“However, pockets such as inner-ring houses in sought-after school catchments will grow above trend.”
Large and small developers in Queensland are noticing the interstate change.
Stockland analysis shows that most interstate buyers to Queensland are coming from NSW, representing about two thirds of total interstate purchases in Stockland’s south-east Queensland communities.
Victorian buyers accounted for a further 12 per cent of interstate purchases, followed by South Australia (8 per cent) and the ACT (6 per cent).
Andrew Whitson, Stockland group executive and CEO of residential, said: “We are seeing a mix of interstate buyers, including those couples and families who are choosing to make the move for affordability or lifestyle change, and investors looking for better value for money than they might get in other markets.
It is no surprise that interstate buyers looking for affordable, high-quality new homes and an appealing lifestyle close to all services are turning their attention to Queensland. The Sunshine State has so much to offer buyers and we expect these trends to continue into 2018,” he said.
Golden State development director Jim Watson said he had seen the bounce back in migration and the subsequent demand for housing several times in Queensland.
“As sure as night follows day when the costs of housing in Sydney get out of sync to the degree they have we see migration to south-east Queensland and its mainly from Sydney.
A typical scenario is a western Sydney home owner who can sell their house where they have had a $200,000 mortgage for $800,000, buy a house in Queensland two streets back from the beach on the coast for $400,000, buy a Jim’s Mowing franchise for $80,000 and have $100,000 in the bank for the first time in their life.