Whenever you are looking to invest it is important to always take a long-term view. No matter what the investment is, this always turns out to be true. So, when looking to acquire either equities or real estate it is important to stay within your circle of competence and to have a reasonable understanding of the factors that will influence the price. This brings us nicely to the thesis of this article; FIVE reasons we believe that now is a great time to invest in real estate. This is based on a few simple factors which are amounting to the fact that the growth of the population in South-East Queensland (SEQ) is out pacing the rate at which new homes are being built.
The state of the construction industry
The slow supply chain and the collapse of many companies in the building industry is having a significant impact on the pace of home building. Supply chain disruptions caused by the COVID-19 pandemic have made it more difficult and expensive to acquire building materials, leading to delays in the construction of new homes. The slowdown in house building is compounded by the collapse of many building companies, resulting in further delays in the pace of new housing stock.
This slowdown in the pace of home building is likely to have several consequences. Firstly, it may be causing a bit of a stabilizing effect in the face of receding property value. Secondly, it may lead to a lack of affordable housing options for renters and buyers, as the limited supply of new homes makes it more difficult to find an affordable place to live.
Infrastructure
South East Queensland is undergoing a transformation with numerous infrastructure projects underway that are set to change the face of the region. These projects, include the Queens Wharf development, Cross River Rail, the Olympic infrastructure, Toombul and Brisbane Airport redevelopments, Kangaroo Point Green Bridge, Victoria Parklands redevelopment, Brisbane Metro, Eagle Street Pier, and the Brisbane International Cruise Terminal, to name a few. These are expected to have a profound impact on the local residents and real estate prices.
Queens Wharf, which will feature luxury hotels, residential apartments, dining, and entertainment options, will be a major draw for tourists and locals alike, boosting the real estate market in the surrounding suburbs such as South Brisbane, Kangaroo Point, and New Farm. The Cross River Rail project, a 10.2 km rail line, will provide improved transport connections and is expected to drive growth in suburbs along its route, including Milton, Ashgrove, and Enoggera.
The Olympic infrastructure, including the upgrade of the athletes’ village, will provide a significant boost to the real estate market in suburbs such as Cannon Hill, Carindale, and Manly. The redevelopment of Toombul Shopping Centre, Brisbane Airport, and the Kangaroo Green Bridge will bring new job opportunities and improved transport links, making suburbs like Nundah, Sandgate, and Kippa-Ring more attractive to residents and investors.
The Victoria Parklands redevelopment, Brisbane Metro, and Eagle Street Pier are expected to drive growth in suburbs such as Newstead, Taringa, and Indooroopilly. The Brisbane International Cruise Terminal will bring new investment and tourism to suburbs such as Hamilton, New Farm, and Kangaroo Point.
Our research indicates that over the next 10 years, the three levels of government and the private sector will spend north of $200 Billion on infrastructure, development projects and upgrades for the Olympic games!
Vacancy Rates
A vacancy rate of 1.1% in Brisbane’s housing market indicates a tight rental market, with limited rental properties available for tenants. When the demand for rental properties is high and the supply is low, it is likely to drive up rent prices. Landlords will be in a strong position to demand higher rents as they have less competition and tenants are more likely to be willing to pay a premium to secure a property. This is good news for landlords and investors who own rental properties, as they can expect to see higher returns on their investment.
However, high rent prices may discourage some tenants from renting in Brisbane, which could lead to a decrease in demand for rental properties. This, in turn, could put downward pressure on rent prices, creating a more balanced market.
When it comes to home prices, a low vacancy rate can also have an impact, as it signals a strong demand for housing in the area. This increased demand can lead to higher home prices as buyers compete for limited properties, driving up prices. In this situation, now could be a good time for homeowners to sell their properties, as they can expect to receive a higher price.
For potential real estate investors, a low vacancy rate can be a positive indicator of a strong and growing housing market. However, it is important to consider other factors such as the local economy, population growth, and infrastructure development, to determine the long-term outlook for the market.
Regarding the Olympics in 2032, it is likely that the vacancy rate will decrease even further as the influx of visitors and athletes creates an increased demand for rental properties. This is expected to drive up rent prices and make it an attractive investment opportunity for real estate investors. However, it is also possible that the influx of visitors and the resulting increase in demand for rental properties could lead to a decrease in the vacancy rate, making it harder for tenants to find a rental property.
The Olympics
The 2032 Summer Olympics in Brisbane, Australia, is expected to have a significant impact on the city’s real estate market. The event, which is scheduled to take place from September 17 to October 2, 2032, will attract thousands of athletes, officials, tourists, and media personnel from around the world. This influx of people will create a demand for short-term and long-term rental properties, driving up rental prices and making it an attractive investment opportunity for real estate investors.
In addition to rental properties, the Olympics is also expected to drive up demand for residential properties in the areas surrounding the sporting venues and other facilities. Many people are expected to move to Brisbane to be closer to the action, creating a strong demand for homes in the suburbs and city centre. This is expected to increase property prices and create a more competitive market, making it a good time for homeowners to sell their properties.
The 2032 Olympics will also provide a boost to the local economy, creating jobs and increasing spending on local businesses. This will help to improve the overall quality of life in Brisbane and make it a more attractive place to live, work, and invest in real estate.
Immigration
The resumption of immigration following the calm of the COVID-19 pandemic is likely to increase demand for rental properties in Brisbane, which could put upward pressure on vacancy rates. As more people move to the city, the demand for rental properties will increase, making it harder for tenants to find available properties. This could lead to a decrease in the vacancy rate, making it more difficult for tenants to find a place to live.
At the same time, increased immigration is also likely to drive up home prices as more people compete for a limited supply of properties. This could make real estate investments in Brisbane more attractive, as higher demand is likely to result in higher property prices and rental yields.
However, it is important to keep in mind that while increased immigration may drive up real estate prices and rental yields in the short-term, it is just one of many factors that can impact the real estate market. Other factors such as interest rates, the local economy, and infrastructure development can also have a significant impact on the housing market.
While the immediate outlook for global markets and real estate might be sluggish or negative. It is important to remember that in our small section of the world there is so much growth to come! Given the factors discussed above and the fact that we have a unique situation where property values are receding, but rents are increasing. This all points to the fact that buying real estate now and holding for the long term, will produce a fantastic investment.
