Brisbane Investor Overview Q1 2012
This report provides a comprehensive analysis on investors purchasing within the Brisbane Local Government Area (LGA). Analysis was conducted for settled house and unit sales within the six month period ending October 2011, with a comparison to the six month period ending October 2010. For the purpose of this report, sales for homeowners have been excluded, as have sales above $10,000,000. Only house and unit stock were analysed in this report.
While there is still a portion of sales that have yet to settle, the analysis has provided a succinct conclusion of investment within the Brisbane LGA. Investors prefer units within the inner city suburbs and houses in the more affordable outer suburbs of Brisbane. Suburbs within the inner city provide a range of demand from young professionals to students, while the outer suburbs may be at a more affordable price point and can offer the potential of higher capital growth over time.
The majority of the investor spend occurred within the inner city suburbs, with the CBD registering the most at $94.5 million. This was followed by Newstead and New Farm, achieving $85.9 million and $42.3 million respectively. The top three suburbs to receive the most investor spend remained the same from the previous year. Investment inside the Brisbane CBD decreased by 17 per cent from the previous year, while New Farm experienced a significant decline of 49 per cent. Newstead however, increased by 18 per cent in total investment spend.
Investors themselves, tend to be local, with few investing interstate and even fewer investments originating internationally. Compared to the previous year, total international spend has decreased by 34 per cent, while the volume of international investor sales has also decreased by 29 per cent.
Looking at domestic investment within Brisbane, interstate investment is down 30 per cent and Queensland investment in also down 27 per cent. Of the interstate investors, the majority are from New South Wales, at 45.5 per cent of all interstate sales. The majority of investors are located in the inner suburbs of Brisbane, but interestingly, there are a number of south Brisbane suburbs which have made the top 20 investor list, while north Brisbane was represented with only one suburb.
While investment within the inner suburbs has been and will be consistent, northern Brisbane is attracting attention through a significant amount of new supply that has become available. Regions such as Chermside, Albion and Lutwyche are undergoing development that will provide not only opportunities for residential investment, but better transportation and amenity for the regions residents.
Brisbane City continues to be the investors choice as the most popular suburb for the total number of sales and accounts for the largest portion of dollars spent.
The vast majority of investors are found locally, with only one per cent originating from overseas and 14 per cent interstate.
The majority (16.2 per cent) of investment purchases occurred within the Yeerongpilly parish, followed closely by the Bulimba parish.
Looking ahead, northern Brisbane will attract attention through a significant amount of new development in infrastructure and amenity.
Total Investor Sales
Total investor sales in Brisbane has decreased from the previous year from 5,036, to 3,865, equating to a decrease of 23.3 per cent. However, the final number of settled investor sales are yet to be determined for the six month October 2011 period as a portion of sales have yet to settle. For example, many acquisitions from off the plan apartment developments will likely settle over the next three to 12 months, reducing the decreased sales percentage figure provided.
Top 20 Invested Suburbs
As can be seen from the Top 20 Invested Suburbs table, the Brisbane CBD attained largest portion of investor sales over the six months to October 2011, with 4.45 per cent of the total settled sales (over twice the number of sales from the second placed suburb of Chermside). This represents a slight increase from 4.09 per cent during the 2010 period.
While there was what can be described as a balance of settled sales across the Brisbane LGA, the majority at 16.2 per cent occurred within the Yeerongpilly parish, followed closely by the Bulimba parish (14.1 per cent) and the Enoggera parish (13.6 per cent). When compared to 2010, the top three lists was exactly same, with Yeerongpilly increasing by one per cent, Bulimba decreasing by 0.6 per cent and Enoggera increasing by 0.8 per cent from the last year.
It is interesting to note the range of location for suburbs on the Top 20 table. Typically, investor hotspots have remained within the inner city suburbs, however, suburbs like Doolandella, Forest Lake, and Calamvale show that investors are willing to spend in an outer area that may provide better yields and potential capital growth.
What product are they purchasing?
Although housing stock is higher priced than unit stock and typically provides a lower gross yield, when closely analysed it is determined that approximately 50 per cent of investors have purchased units to houses. The majority of investors, who bought a free standing home, did so in the suburb of Forest Lake over the six month period ending October 2011, registering 55 house sales. This was followed by Wynnum (34), Coorparoo (33) and Bracken Ridge (32). When observing the previous year, Inala recorded the most house sales at 62, followed by Forest Lake (61) and Wynnum (48). When observing the top 20 house suburbs, an overriding trend of affordability appears. The majority of the top 20 suburbs are located either in the middle to outer Brisbane, allowing for investors to capitalise on more affordable house prices, which in turn may lead to greater yields. Noticeable exceptions to this trend are the higher priced suburbs of Paddington and Ashgrove. This may be as a result of being within close proximity to the Brisbane CBD and University of Queensland, which leads to a high level of demand from rental demographic.
Investors who have purchased unit stock have typically done so in a location within close proximity to the CBD, if not the CBD itself. Localities that typically attract investor spend tend to be where there is both a significant level of supply and large demand from renters. This naturally favours the inner city suburbs which cater to the employment opportunities and low maintenance lifestyle, with easy access to public transportation. The top 20 suburbs where investors have purchased unit stock are heavily comprised of examples of inner city suburbs, like Newstead, Kangaroo Point, Fortitude Valley, and Spring Hill. However, while the majority of investors who purchased units favoured Brisbane City, at 8.5 per cent of total unit sales and its neighbouring suburbs, there are localities outside the CBD that are priced at a more affordable level and offer the right mix of employment opportunities, amenity and transportation that attract demand from renters.
Chermside and Indooroopilly are examples of these localities. Chermside, located nine kilometres north of Brisbane has attracted the third highest level of investors who have purchased units, at 3.3 per cent. This locality is part of the northern region which is in the midst of a large scale development in transportation infrastructure, such as the Northern Busway and Airport Link, but also is a region that has seen significant amount of apartment stock come onto the market. Chermside itself has one of the largest shopping centres in Brisbane, a nearby hospital and will eventually be linked to the Northern Busway, when completed. Investors have also favoured suburbs that also include demand from students. Localities like St Lucia, Toowong, Kelvin Grove and South Brisbane were placed in the Top 20 locations to attract investor sales. These suburbs have traditionally supplied a strong pool of renters that range from students to young professionals.
Where do investors come from?
Sellers looking to attract investors should consider that the majority of investors prefer to purchase smartly within their own backyard. Only one per cent of investor sales within the studied analysis originated outside of Australia and 86 per cent of the Australian based investors are within Queensland. New South Wales accounted for the second highest level of investors, at seven per cent. Brisbane investors accounted for the majority of the total investor sales, but were on the whole, evenly dispersed throughout the City. While the majority of investor originated from the inner city suburbs, large portions of investors were found in the outer southern suburbs like Eight Mile Plains, Sunnybank, Calamvale, and Forest Lake. The only outer north suburb to reach the top 20 list was Aspley, at joint 18th place.