Episode Details

I hosted a seminar in August 2018 where I presented an investment case for (investment-grade) houses in Brisbane in the $800,000 to $1m price range. It was my thesis that they represented excellent value and had a high probability of delivering above-average returns in the medium term. An investment grade house that sold for circa $800,000 in late 2018 would be worth well over $1 million today.

Depending on your financial position, existing assets and investment strategy, an investment-grade property in Brisbane might still be an excellent investment. I set out some pros and cons to consider in this blog (in no particular order).

Pro: Overseas and interstate migration

The chart below sets out interstate migration for NSW, Victoria and Queensland. Sydney’s interstate migration has been negative for many years (as a Melbournian, I’ll resist the temptation to disparage Sydney). The clear trend over the past 5 years is that a growing number of people are moving from Victoria and NSW to Queensland. However, historically, almost all interstate migrants move to the Sunshine and Gold Coast, not Brisbane. However, I suspect that Covid might change that trend.

This next chart sets out net overseas migration since 2004. Overseas migration declined significantly between 2008 and 2015. It was starting to recover but of course Covid has interrupted that. Unlike interstate migration, almost all overseas migrants move to Brisbane.

Interestingly, New Zealanders tend to represent around half of the total permanent migrants. But fewer New Zealanders have been moving to Queensland in recent (pre-covid) years. The number of New Zealand migrants between 2017 and 2019 ranged between 1,500 and 3,000. By comparison, in 2008 over 16,000 New Zealanders moved to Queensland. A rebound in New Zealand migration could have positive consequences for Brisbane and its property market.

I suspect that Covid has highlighted how attractive Australia is as a designation for overseas migrants. And, for some of the reasons highlighted below, Brisbane is well positioned to attract a large share of these immigrants.

Pro: Large infrastructure spending

Brisbane is in the midst of a

$20 billion infrastructure spend including major projects such as Cross River Rail, Queen’s Wharf Precinct, Showgrounds Masterplan, Brisbane Live entrainment precinct and so on.

Last year, the Queensland government completed construction of a second runway at Brisbane airport at a cost of $1.4 billion. It is projected to generate $5 billion of economic benefit over the next 10 years.

And of course, Brisbane will host the 2032 Olympic games. KPMG projects that it will deliver $4.6 billion in economic benefits.

These infrastructure projects contribute positively to Brisbane’s ability to attract a growing number of overseas and interstate migrants.

Con: Smaller city (population)

Brisbane’s population is almost half the size of Melbourne and Sydney, which means there are fewer high net worth persons that are willing and able to drive blue-chip property prices higher. As I have written before, property