How many hold an investment property?

There is a lot of noise being bantered about regarding property investment of late.

No surprises here given the pending federal election; the likelihood of a close result and the mooted investment property changes by the Labor Party.

I don’t want to join the noise, but when I read or hear gibberish I always like to go back to the numbers.

So just how many Australian households hold an investment property?  And who are these cats?

A quick summary

  • There are about 9 million dwellings in Australia
  • Of which some 1.8 million are held by investors
  • So, 20% of Australian households hold an investment property and 80% don’t

More detail

The top investor age groups are:

  • 25% are aged between 55 and 64 years
  • 24% are aged between 45 and 54 years
  • 22% are aged between 35 and 44 years
  • And just 15% are aged under 34 years

When it comes to the investment property’s value (in today’s dollars), investor’s think that:

  • 35% are worth between $250,000 and $500,000
  • 18% are worth less than $250,000
  • 18% are worth between $500,000 and $750,000
  • And 6% think their investment property is worth over $2 million. Hmmm, tell them there dreaming!

And finally, how many investment properties do investor households hold? 

  • 73% hold one investment property
  • 17% hold two investment properties
  • 6% hold three investment properties
  • And just 4% hold four or more investment properties

To add the numbers to this spread:

  • 1,309,000 investor households hold one investment property
  • 302,000 hold two investment properties
  • 104,000 hold three investment properties
  • And just 85,000 investors hold four or more investment properties

The best way to understand what is going on is to go back to the actual numbers.

My Kitchen Rules

I hope you had a relaxing Easter break.

We typically have friends and relatives gathered around at our place.  And this year, both adult daughters were visiting, and it was interesting to observe where we spent most of our time awake whilst at home.

In short, the kitchen area and family/tv room got the lion share.

This reminded me of a study we completed a few years back for a home builder client who engaged us to find out where residents actually spent their waking hours in their home.

This work involved a survey of 100 family households – each holding two working adults and at least one child living at home – in Sydney, Melbourne and SEQld.  The survey period covered a typical week.  Most households surveyed spent, on average, about six hours – 360 minutes – awake in the house each day, including the weekends.

The results of this survey are as follows:

Rank House area Average time spent per day
Minutes
1 Kitchen area 38% 137
2 Family/TV room 17% 61
3 Porch/Balcony 10% 36
4 Bedrooms 8% 29
5 Bathrooms 6% 22
6 Study/office 5% 18
7 Yard 5% 18
8 Shed/Garage 5% 18
9 Formal living room 4% 14
10 Formal dining room 2% 7
Total 100% 360

Some observations

Obviously, some areas of the typical family home are no longer needed.  The classic examples being the formal living and dining rooms.

Other areas, whilst having little waking time use over the typical week, are still important.  These include a study, yard, shed and garage.

It is interesting given the trend towards fast, pre-prepared meals – so the kitchen is increasingly acting as a food assembly area rather than a place where many actually ‘cook’ – that the kitchen still rules.

My opinion here is it is where everyone congregates which is important rather than the kitchen’s traditional functionality.

Other recent research by us – this time questioning potential buyers after they had visited a home display village – found that one of the first things a home buyer does when looking to a new home design is to check out where their family and friends can gather and if that space/s will work for their tribe.

This area, often by default in most houses, is the kitchen space, followed by the family room and/or balcony-porch.

For mine, a home that has these three spaces in a continuous, free following expanse more often than not comes up trumps.

How much is a view worth?

There is some science behind what we do and often there isn’t enough ‘light and shade’ between individual prices, resulting in some product selling quickly and other stock remaining unsold.

Getting the price right, across the board, is often hard and an independent set of eyes is well worth the effort.

One of things that is often misjudged, when it comes to pricing, is factoring in how much a view is worth.

To that end we have undertook a study in 2018 to help provide us with some guidelines and we found that certain types of view added a different value to a property.

Our work identified the different views available and then we looked at how much they can increase a dwelling’s value. Our investigation was also based on an identical new dwelling built in the same area (but with differing views) with a base price of $500,000.

The five major view types:

1. Ground level, unobstructed view (3% to 5%).  This type of view means that you are located at the same level as many of the other properties around you, but you have the advantage of having a view that allows you to see a large, non-residential space, like open space.  Such a view increases a properties sale price by between 3% and 5% and the new sale price could be as high as $525,000.

2. Rooftop, partially obstructed view (6% to 8%).  A view from above would suggest that you can almost see over all of the other properties around you but there may be a few buildings that partially obstruct your view. Generally, the higher you are, the more value a view can bring to your home, so a rooftop’s partially obstructed view can bring in an additional 6% to 8%, lifting the potential sales price to $540,000.

3. Unobstructed view from a medium elevation (9% to 12%).  This category is primarily reserved for homes that reside on the top of a small hill.  This particular view can see areas all around a home without any obstructions but aren’t high enough to see far beyond the house’s small community.  Having an open area will always command more money than if you can only see a few houses down, so this type of view has the potential to add between 9% and 12% to the value of your home, so the new sale price might be $560,000.

4. Unobstructed view from high elevation (15% to 25%). Doing much better than the previous view, being able to see a wide vista from the comfort of your own home can add significant value to it.  Our estimates here have a wide range because much depends on what you see.  Still, the value of the real estate can increase substantially, with the new sale price as high as $625,000.

5. Unobstructed water view (30% to 80%).  The biggest attraction of a view continues to be a large body of water, with the higher premiums being given to salt water.  Also, at the upper end of the premium range the water view needs to be unobstructed and the more rooms it can be seen from, the better.  Depending on the body of water, the residence can increase in value up to 80%.  This would mean that our $500,000 base house has a potential price tag of $900,000.

In summary, pricing a view is certainly not an exact science but as more and more properties are constructed in an area, the chances of finding a great view are becoming increasingly difficult.  Hence, properties with a view command a range of premiums now and these bonuses are likely to rise further in the future.

The three RPs

The Qld state government have just released a new data set for SEQ which represents the stock of approved and as-yet-unconstructed multiple dwellings.

For example, where 30 townhouses were approved and 10 were constructed, the approval balance included in these results would be 20 dwellings.  These dwellings would be counted as one (1) project approval.

Material Change of Use (MCU) multiple dwelling approvals data is a good indicator of the potential supply of predominately attached dwellings in the short to medium term.

Below are 3 tables which summarise the current state of play.

Table 1: SEQ: MCU multiple dwelling approvals – 2018

Local authority Project approvals Dwelling approvals % dwellings
Brisbane 1,590 61,127 48%
Gold Coast 743 36,282 28%
Ipswich 181 2,846 2%
Lockyer Valley 36 332 0%
Logan 458 7,298 6%
Moreton Bay 232 8,123 6%
Noosa 53 924 1%
Redland 124 2,029 2%
Scenic Rim 53 349 0%
Somerset 22 41 0%
Sunshine Coast 275 7,063 6%
Toowoomba 150 1,849 1%
South East Queensland 3,917 128,263 100%
Projectadvice.com.au + Qld Govt.  Stock of approved and as -yet-unconstructed multiple dwellings.  As a June 2018.

Table 2: SEQ: MCU multiple dwelling approvals – 2011 v 2018

Local authority 2011 dwelling approvals 2018 dwelling approvals Change
Brisbane 29,240 61,127 31,887
Gold Coast 12,213 36,282 24,069
Ipswich 2,785 2,846 61
Lockyer Valley 146 332 186
Logan 3,716 7,298 3,582
Moreton Bay 4,816 8,123 3,307
Noosa 594 924 330
Redland 2,269 2,029 -240
Scenic Rim 32 349 317
Somerset 17 41 24
Sunshine Coast 3,154 7,063 3,909
Toowoomba 1,016 1,849 833
South East Queensland 59,998 128,263 68,265
Projectadvice.com.au + Qld Govt.  Stock of approved and as -yet-unconstructed multiple dwellings.  As a June 2011 v June 2018.

Table 3: SEQ: MCU multiple dwelling approvals by project size – 2018

Project size Dwelling approvals % dwellings
Under 10 dwellings 8,353 7%
11 to 20 dwellings 6,608 5%
21 to 50 dwellings 14,815 12%
51 to 100 dwellings 19,105 15%
Over 100 dwellings 79,383 62%
South East Queensland 128,263 100%
Projectadvice.com.au + Qld Govt.  Stock of approved and as -yet-unconstructed multiple dwellings.  As a June 2018.

A quick summary

  • Some 3,900 multiple dwelling projects across SEQ have been approved but still have stock yet constructed.  The amount of unconstructed stock amounts to some 128,000 dwellings.
  • By our estimates that’s in excess of ten years supply!
  • Most of this unbuilt stock is in Brisbane (inner city area mostly) and on the Gold Coast.  Revisit last week’s missive here.
  • Not surprising, there has been a huge increase in the volume of unbuilt multiple dwelling supply over the last seven years; up by 68,000 from the 60,000 count in 2011.  That’s a 113% increase.
  • Again, the biggest increases have been in Brisbane and on the Gold Coast.
  • A review of the current unbuilt supply finds that three-fifths (62%) are in larger multiple dwelling projects.

The three RPs

These MCU figures also show that many attached dwelling projects are having problems securing enough off-plan sales to start construction.

Our recent work suggests that many suffer from a poor ‘local market match’.

The three RPs are vital:

  • Right Product
  • Right Price
  • Right Promotion

MCU defined

Multiple dwelling developments include relative’s accommodation, dual occupancies/duplexes, flats, units, townhouses, villas, apartments and includes short-term accommodation.

In addition, relocatable homes, tourist accommodation, and dwellings approved in retirement villages/facilities are included where they are self- contained.

Group accommodation where facilities are shared and purpose–built student accommodation are not included.

SEQ new dwelling supply

This post outlines the current state of play when it comes to new housing supply across SEQ.

This missive holds two charts plus a missive extra table at the end of the post.

Chart 1 explained

Chart 1 shows the interplay between housing demand and two measures of new dwelling supply – dwelling approvals and dwelling registrations.

Dwelling approvals (the grey line) is the beginning of the supply process.  Many new dwellings that are approved – and particularly in apartment projects – are not commenced as originally planned.

A more accurate measure of actual new housing supply is a dwelling registration.  This happens when the property title is transferred from the developer to the buyer and takes place at settlement.  See the red line in chart 1.

For more detail see our missive extra table below.

A quick summary

  • The SEQ new housing market was oversupplied between 2011and 2013. This was mainly due to too many new apartment buildings in Brisbane.
  • Since 2014, however, the new apartment approvals have fallen substantially. In addition, a lot of the approved new apartment stock hasn’t started.  When they actually proceed will depend on demand.  I anticipate that new apartment supply in Brisbane in coming years will remain subdued.
  • Whilst new dwelling registrations have increased in recent years – revisit the missive extra table – this rise is mainly for detached homes and townhouse style developments.
  • The lift in dwelling starts (registrations) is also in response to mounting population growth.  See chart 2 above.

End note

One of SEQ’s big plusses – when it comes to a safety net helping keep a floor under housing values – is that the region isn’t currently oversupplied with new housing stock.

It might have been overcooked a few years ago, but that no longer is the case.

Good news!

SEQ land market trends

This post outlines the current state of play when it comes to the SEQ land market.

This missive holds two charts plus a missive extra table at the end of the post.


A quick summary

  • SEQ land sales have dropped sharply over the last 12 months.  Yet land values continue to rise on an end price, also on a $/m2, basis.
  • Traditionally, like the dwelling market, a decline in land sales means weaker land prices, but this doesn’t seem to be happening at present across SEQ.
  • Our work suggests that; despite both state and local government assurances that there is amble land available for urban development in SEQ; on the ground this really isn’t the case.
  • The continued decline in median lot sizes also suggest that development land supply is tightening up.

Recent development trends

Our review of residential development trends over the past three years across SEQ has found:

  • 75% of all residential development applications in SEQ are for projects with under 10 dwellings, yet these small developments, when combined, make up just 5% of all the new dwelling starts.
  • In contrast, new projects with over 50 dwellings supply 80% of the new homes across SEQ, yet these larger projects account for just 10% of all development applications.
  • Some 45% of the apparent land supply available is currently set aside for medium to high density residential development, whilst 55% is allowed for detached dwellings and infill product like townhouses, duplexes and dual+ occupant housing.  This supply assumption is at odds with current local market trends and does not fit SEQ’s future domestic demographic shape.
  • A review of approved residential projects that are unlikely to proceed finds that a third of them, across SEQ, involve higher density development, whilst just 5% are for detached housing/townhouses.
  • Furthermore, the smaller the project the less likely it is to proceed. At present some 30% of approved projects with under 10 dwellings is stalled, whilst this proportion (as a count of total potential dwellings supplied) is just 7% for approved developments with over 50 dwellings apiece in SEQ.

Land supply constraints

My simple summation here is that there aren’t enough major development land parcels to cater for demand in SEQ.  The current rationale is that smaller residential projects and higher development yields will cater for an increasing proportion of SEQ’s housing stock.  Yet recent trends suggest that this isn’t working.

In addition to this market mismatch, the land which is perceived to be readily developable, really isn’t.  It is constrained by numerous things such as:

  • Fragmented land sizes and ownership
  • Unrealistic urban densities
  • Various excessively restrictive planning overlays
  • Lack of affordable and co-ordinated infrastructure provision
  • Urban economic inefficiencies
  • Long and uncertain approval processes

Some local councils are better than others, whilst other LGAs have their heads in the sand.  The recently assembled state government land supply council – based in their first round of reporting – appears to be echoing the status quo.

End note

For mine, the priority should be building homes for local residents not overseas buyers or international tertiary students.

The lack of appropriate new development land is already having a negative impact on local job creation and housing affordability. Unless SEQ increases its land supply and facilitates  more wanted urban development, economic growth will go elsewhere.

Timely urban development and infrastructure is the key to facilitating economic growth.  You cannot have one without the other.

It’s time to pull your finger out SEQ!

Trendlines, not headlines

Now that the summer holidays are over and most of us are back on the tools, it might be best to start the batting this year with an opinion piece.

In turbulent circumstances it often pays dividends to set the appropriate tone upfront.

The Australian housing market – as seen through the news and other media – will mostly be a depressing place in 2019.  And if not disheartening, then contradictory at best.

The headlines will tell us about falling prices; rising costs; declining sales; overbuilding; rising supply and, of course, the impact of the banking royal commission and the pending federal election.

But the media (and especially much of the property related commentary) even at its most accurate is bound to paint a distorted picture of reality.

At its core, the ‘news’ is about things that happen and/or what data/study has been released and not about things that don’t happen, such as most of us getting on with our lives; buying and selling homes (often for a capital gain) and/or new housing projects getting developed.

Adding to the gloom is the ethos of the mainstream media, in which reporting a failure is deemed a professional duty, whereas broadcasting success is considered ‘public relations’.

But to get an accurate picture of the world you have to ‘count’.  You also need to take a long view and not rely on the latest statistic or number.  In short you need to go beyond the headlines and follow trendlines.

True past performance is no guarantee of future results.  But history – and in particular the property market – is cyclical.

So, what really matters?  What trendlines count?  What should be ignored?  How does one assess what is really going in your relevant housing market?

Below is a list of things that I think matter. They apply to all geographic areas; housing types and both new digs and resales.  A deep understanding of these trendlines cancel out any headline.

Ask yourself these 5 questions.

1. What is the local time?  That is to say where is the relevant local market and housing product positioned on the property clock.  The action taken depends on the time.  Whilst the property industry doesn’t like me saying this, sometimes the best course of action is to do nothing at all.

2. How deep is the market?  What is the current and future level of relevant housing demand?  Here we are counting sales by price group; product type and dwelling characteristics plus the underlying need to supply more housing.

3. What is the current and likely future level of housing supply?  It is best to include supply on several levels including resales; new developments and also dwellings available to rent.

4. Who will buy or rent the dwelling?  Here we suggest breaking the existing and future market into either generic demand groups (first home buyers, upgraders and downsizers for example) or lifecycle segments (such as young couples no children, families with young children and older lone persons households etc.).  Regardless of method, is the local ‘target market’ big enough to help you succeed?

It is often best to reverse this analysis and determine the size and direction of the relevant local housing market segments first, and then, deliver to appropriate product to them rather than trying to ram your predetermined ‘square’ product into a ‘round’ hole.

The ramrod approach can work when things are going well but rarely when things are more cactus.

5. What makes this property and location special?  Consider the things that really matter like local employment; income levels; schools; transport and affordability.  The hard-core stuff not the fluff.

And finally, it often pays to do a ‘Denzel Washington’ and clarify your rationale to yourself like you were explaining it to a five-year-old.

For younger readers watch the 1993 movie Philadelphia.  It won several Oscars including best sound track by Bruce Springsteen.

10 Things: 2019

1. Politics.  I don’t want to wax lyrical here, just to say there is likely to be a May federal election. So, it will be a year of two halves, with stuff-all business wise happening until the election – and post the event and regardless of result – things economic should improve.  At present, how much is anyone’s guess but how far the housing market tanks will be a key factor.

2. Two speed economy.  Public versus private.  Almost all of our economic growth of late is due to the public sector, population growth and debt.  On the private side, businesses are taking profits, rewarding shareholders but not employing more or raising wages.  Most economic indicators, on a per capita basis, are down.

3. Cash rate.  Unless we see a lift on the private side of the economic ledger then the cash rate will fall.  I have been saying for some time that this is very likely, as we have been in an ‘income recession’ of some time.  Now that the official statistics suggest similar, the “cut rates” calls are increasing. Two cuts of 0.25% each are on the cards in 2019.  Chinese walls between the RBA and current government and an attempt to keep mortgage rates were they currently sit are the main reasons why.

4. A two-speed housing market too.  Sydney and Melbourne are over cooked whilst much of the rest of the joint is about “just right”.  What drove prices up in the two big smokes hasn’t happened elsewhere.  I don’t expect big price (or rent) gains in coming years – and maybe for a decade – in areas outside of Sydney and Melbourne.  But values are likely to continue to fall in Sydney and Melbourne in 2019.  How far down they could go is a like throwing a dart, but another 10% drop in values – from the 2016 market peak – is possible.

5. Perception.  Negative press is set to continue, especially now with the Nine Network in the Aussie mainstream mix.  Maybe best not to watch commercial TV, read the newspapers or listen to the shock jocks. But importantly it is when you bought a property which has a big influence on your mood.  ME Bank did a good poll a few weeks back.  See the table below.

Issue Purchased dwelling when?
Last

12 months

12 to 36 months ago Longer than 36 months ago
% worried about value falling  

70%

 

66%

 

49%

% worried about losing money on the property  

60%

 

68%

 

35%

% worried about owing more than it is worth  

57%

 

68%

 

27%

% regretting that they paid too much  

46%

 

48%

 

15%

Punters who bought three-plus years ago appear less stressed about the housing market’s current direction than those that bought more recently.  The last line in the table is interesting.  Despite the worries, only one in six (15%) of the 1,500 people surveyed by the ME Bank who bought three-plus years ago regret that they paid too much.  So maybe it’s largely just whinging after all.

6. Population.  We need a long-term population policy, but pigs might fly too.  I suspect that the current level of annual increase (400,000) will ring true for some time.  Most of this new growth will continue to settle in four areas of Australia being Sydney, Melbourne, SEQ and Perth.  More will escape from Sydney and maybe Melbourne and move north (NSW coast and SEQ) or south (Tasmania), but many will be economic refugees or retirees.

How much they will influence house prices is questionable.  As outlined last week more private investment is need in SEQ before housing values lift in earnest.  You need private sector jobs and higher paying ones too to lift property values.  There are no free kicks left.  Interest rate cuts will be an attempt to keep the current status quo.

7. Wages.  A lot is against the return to half decent wage growth.  Automation, digitalization, the internet of things and algorithms are all stacking up against automatic annual lifts in how much most of us get paid. There will be more lower paying jobs in the future.  Middle income households are likely to be further squeezed.

8. Land supply.   Here I will keep my comments to SEQ and in this region the current levels of practical of land supply – being broad hectare and serviced parcels – is in very short supply.  There are heaps of infill, fragmented smaller pieces of potentially re-developable land, but in reality, developing much of this stock is just a pipe dream.  This issue needs sorting out.  If it isn’t people will move elsewhere and the SEQ economy will suffer.

9. Housing demand.  The two largest housing demand segments, starting in earnest next year, will be first home buyers and downsizers.  See the table below.

Australia
Past and forecast annual housing demand by key household segment

Key household segment Last decade

Annual change

Next decade

Annual change

Change
No. % No. % No.
Young renters 29,000 23% 14,000 9% -15,000
First home buyers 7,000 6% 29,000 20% 22,000
Upgraders 28,000 22% 18,000 12% -10,000
Downsizers 36,000 29% 47,000 32% 11,000
Retirees 12,000 10% 26,000 18% 14,000
Aged 14,000 11% 14,000 9% 0
Total households 126,000 100% 148,000 100% 22,000

Matusik database + ABS various.

These two markets segments want certain things. Revisit my earlier posts on these markets here and here.

And also, of note is the underlying need to build more homes per annum over the next decade, when compared to the last ten years.  This is because downsizers and, in many cases, too, first home buyers, have smaller households than the upgrader market segment.  Swelling overall numbers – in both the first home buyer and downsizing buyer segments but with less people per household – increases the need to build more dwellings.  Now if only the right stock (and at the right price and place) can be supplied?

10. And lets finish with negative gearing.  In short, if applied to new builds only, then more investment homes will be built.  But more pertinent is that the removal of NG will see a big change in the type of investment housing sought.  More rental income will be needed.  This usually means more tenants per asset.  Yet most local authorities are starting to over regulate (or even outright ban) dual-occupancies, ancillary dwellings and granny flats.  We need to get this also sorted and fast.

My quick summary

2019 will be harder than 2018, but probably not as bad as most think.

Measure five times cut once.

Bridging Brisbane

One of Brisbane’s biggest assets is the Brisbane River.  It is also one of the region’s major challenges.  For mine – and it would appear to many others too – there isn’t enough river crossings in Brisbane.

I touched on this issue as few months back when I questioned the lack of public open space in inner Brisbane and this lack’s likely detrimental effect on future inner-city high-density residential development.

To revisit go here: Missing: Green Infrastructure 

That post received many replies, with several subscribers telling me about a recent RACQ study into the local population’s perception about building more bridges in Brisbane.

Go here to see the full RACQ results: Bridging Brisbane 

A quick summary

  • 4,600 people were surveyed by the RACQ in mid 2017
  • Most drove cars to work; reside in Brisbane’s western, eastern or inner-city suburbs; were aged between 35 and 64 years and were RACQ members.
  • Overall 12 Bridges (including the three associated with the Wilson Triple Jump) and two tunnels were considered.  Why these 12 river crossings were selected is outlined in the missive extra section at the end of this post and they are shown in the map below.

  • Overall there was very strong support (88%) to build more bridges.  See the table below.
  • The majority want to these bridges to support a range of transport modes including private vehicles.
  • Tolls, in some cases, were also considered a reasonable trade-off between the increased convenience and a way to help offset cost.

Brisbane bridge preferences 
Ranked by level of support

Bridge or tunnel Yes* No
7 West End to St Lucia 94% 6%
3 Centenary Motorway Upgrade 93% 7%
10 Wilson Triple Jump 92% 8%
8 West End to Toowong 90% 10%
1 Moggill Road 90% 10%
2 Bellbowrie to River Hills 90% 10%
11 Bulimba to Teneriffe 90% 10%
4 Walter Taylor Bridge 89% 11%
12 Hamilton to Balmoral 89% 11%
6 East West Link (Tunnel) 84% 16%
5 South West Tunnel 80% 20%
9 Victoria Bridge 69% 31%
Overall average 88% 12%
*Includes both percentage FOR and percentage NEUTRAL

End note

More river crossings would make life much easier for many Brisbane residents and also visitors to the city.  They could also help improve the region’s property values.

They would be much cheaper to supply than the big-ticket items like Cross River Rail and I reckon they would have far greater impact than the big-ticket items too.

There seems to be strong local public support for such infrastructure, yet whenever I have asked about building more bridges in Brisbane – which I have done in several public forums in recent years, including a gathering of five Brisbane Mayors – I have been shut down with the usual political stone walling.

Brisbane is often categorised as a “Lifestyle City” in typologies of world cities.  If that rings true – and I think that is a far better handle than the “New World City” pretence that is currently being flogged – then we best do something that really adds to resident’s lifestyle, which includes improving how most of us move around the joint.

If I was in charge, I commit funds to build all 12-river crossing as outlined above – over the next 25 years.  That’s one crossing every two years, starting from 2019.  Several of the current and proposed white elephants would have to go.  This would include Cross River Rail and the pitch of the 2032 Olympics.  Such is life.

We need things that work not pipe dreams.

Missing: Qld Private Investment

This post I have included seven charts outlining what’s missing when it comes to Brisbane’s housing market.

For the record the latest data from CoreLogic suggest that Brisbane house values rose by just 0.3% over the last 12 months, with values rising 0.1% over the last three months.  So, no price acceleration at the moment.

Now that’s a heck of a lot better than the 8% annual fall in Sydney house values during 2018 and the 6% decline in Melbourne’s house prices over the same period.

But to many the lack of movement in Brisbane’s housing values is a real puzzle – what with the big difference between prices in Brisvegas when compared to the southern smokes and with all those interstate migrants now flocking north out of Sydney.

For mine, a key reason why house prices haven’t moved much in Brisbane (yet) is the lack of private investment.

Queensland is currently attracting about $25billion worth of new private capital expenditure.  This is a 21% share of the nation’s total.  It attracted close to 50% just five years ago.  One of big reasons for the fall is that mining expansion is on the decline. See charts 1 and 2.

New South Wales and Victoria – which attract a lion’s share of the non-mining investment monies – have expanding private investment spending, whilst Queensland doesn’t.

See charts 3, 4 and 5 below.

It is not until Queensland sees more private investment – and more pertinently more non-mining investment monies – that house values will grow in earnest.  See charts 6 and 7.   

In fact, the state’s rising interstate migration intake; the large lift Queensland public service jobs in recent years and now the major public spending in big ticket infrastructure projects is helping keep things, including Brisbane house prices, afloat.

Obviously the large capital injection in mining a few years back – revisit chart 6– has also had a positive impact.

But how long these things can last without more private investment is questionable.

Hopefully the list of big things promised – such as second airport runway; Queens Wharf redevelopment, Brisbane Metro project, Cross River Rail, Brisbane Live and the Brisbane plus Herston Quarters – we see an injection of private spending in Queensland.

That’s what’s missing – private non-mining investment in Queensland.

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